Europe
After another record breaking week for the FTSE100 and FTSE250, caution continues to be the overriding sentiment as investors get used to the altitude of this week’s new record highs.
The German DAX has also found further progress quite tricky as it remains just below its highest levels since April 2015, though it’s not been helped by Deutsche Bank (DE:DBKGn) whose shares have slipped sharply on unconfirmed reports that it may start to look at measures to raise extra capital, including selling off a stake in its asset management business.
It would appear that a further period of acclimatisation is needed before we see enough evidence of where we go to next, with all eyes on this evening’s speech from US Fed chair Janet Yellen.
In France the rise of Emmanuel Macron in the opinion polls to overtake Marine Le Pen is also helping support the French stock market, whilst the FTSE100 and the DAX underperform.
Investors continue to scratch their heads at the speed of the sudden hawkish change of a number of previously dovish Fed officials and in this context it would be a major surprise if she were to push back against her colleague’s comments from earlier this week. It would also be enormously counterproductive in terms of how the market perceives any future market guidance this year.
Financials are leading the gainers in Europe in anticipation of higher yields as economic data continues to show resilience and the downside risks to monetary policy diminish.
Advertising giant WPP (LON:WPP) is amongst the worst performers after warning that 2017 may well be a weaker year as a result of a slowdown in revenues from the US and UK.
Reports that the UK government may look at the latest 21st Century Fox for Sky doesn’t appear to have affected the share price for now, but this morning’s comments by Karen Bradley the culture secretary could well be a sign the suspicions surrounding Rupert Murdoch still remain. The bid which has today been referred to the EU competition authorities is likely to offer a window for Ofcom to get involved as well.
The London Stock Exchange put aside the likely failure of its deal with Deutsche Boerse (DE:DB1Gn) by reporting that while its profits missed forecasts income was still 17% up on the previous year. The company also increased the dividend by 20% to 43.2p.
US
US markets opened mixed at what has been a record breaking week, as investors pulled back ahead of this afternoon’s speech by Fed chief Janet Yellen
Snap is likely to remain in focus after a solidly positive start to its first day of trading as a public company. The level of enthusiasm for a company that remains a long way from making a profit and has little in the way of assets remains surprising, but is indicative of a market looking for new areas to make a return, with the shares rising strongly for the second day in a row. The company now has a market cap larger then eBay, what can possibly go wrong?
On the data front the latest ISM non-manufacturing numbers for February showed an improvement to 57.6, the best performance since October 2015, while new orders also grew at a similar robust rate.
FX
The pound has remained under pressure today after services PMI data for February came in at its lowest level in five months, though it still remains firmly in expansionary territory at 53.3. The numbers still show that the UK economy is on course to grow at 0.4% in Q1, which is a slowdown from the 0.7% seen in Q4, but also not surprising as the lagging effect of higher prices starts to weigh on consumer spending.
The euro has managed to find itself some buying interest after some fairly decent services PMI numbers across the board in February. With input costs continuing to rise quite sharply pressure is now turning to next weeks’ ECB meeting when the governing council will find it that much harder to justify the open ended nature of their current stimulus program.
Commodities
Oil prices have rebounded from two week lows yesterday ahead of the latest rig count data from US oil producers. Reports of fighting near Libyan oil ports could also be helping underpin prices.
Gold prices have remained under pressure in the face of rising US yields and ahead of this afternoons speeches by senior Fed officials.
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