Europe
It’s been a fairly lacklustre session here in Europe today, and a mixed end to a short week and it’s hard to escape the distinct impression that most people have already packed up early ahead of the long Easter break. The FTSE looks set to finish lower for the second week in a row, though other European markets look set to reverse some of the losses seen last week.
Given that we have US payrolls report tomorrow, as well as continuing talks between Greece and the EU, and the Iranian nuclear talks, this reluctance to load up on new positions probably isn’t all that surprising.
A continued fall in iron ore prices, now below $50 a tonne, as well as weaker oil prices has seen the basic resources sector slide back led by Bhp Billiton (LONDON:BLT), Anglo American (LONDON:AAL) and Glencore (LONDON:GLEN).
It’s been a good day for the retail sector, led higher by Marks and Spencer after a well-received trading update.
They say persistence pays off and it’s certainly been a case of if at first you don't succeed, then try, try and try again for Marks & Spencer Group (LONDON:MKS) over the past five years as the decline in sales that we’ve become used to in clothing finally appears to be showing some signs of a turnaround in the company’s latest trading update, which has seen the shares rise sharply today.
It’s certainly very much a case of not before time, after a number of false starts, with the improvement being delivered by an increase in on line sales as the new website finally appears to be bedding in.
When complemented with the continued resilience and outperformance of its food section the hope is that this could well mark a turning point in management’s strategy in turning the clothing business around.
That being said one swallow doesn’t make a summer, as even dead cats bounce, and the improvement in sales needs to be sustained on an ongoing basis before we can say that M&S has recovered its Magic and Sparkle, and truly turned a corner.
US
US markets opened the last session of the week lower after weekly jobless claims came in much lower than expected at 268k, while the February trade balance shrank to -$35.4bn, from -$42.7bn in January. These better than expected numbers tie into the narrative of an improving US economy, and the prospect of a rate hike sooner rather than later, however the improvement in the trade deficit was caused by a sharp drop in imports, which might suggest a falloff in demand.
With US markets closed tomorrow most markets will have to wait until next week to react to the release of tomorrow’s March employment report, which could shift the dial back, if it follows in the wake of the weakness shown in Wednesday’s ADP jobs report.
Last night’s revelation that Kraft Foods Group Inc (NASDAQ:KRFT) and Mondelez International Inc (NASDAQ:MDLZ) are being sued by the CFTC for wheat and price manipulation could well see the share prices of both companies come under some pressure in early trading.
FX
The US Dollar has come under pressure today despite some better than expected US economic data as we get some position adjusting ahead of tomorrow’s US employment report. With most major markets closed tomorrow it seems that traders are paring down some of their long dollar positions just in case we get a disappointing number.
The best performer today has been the euro, shrugging off reports that Greece will run out of money in a weeks’ time, it has continued to squeeze higher despite concerns about the continued impasse between the Greek government and its creditors, which markets appear to be largely tuning out as background noise.
The Australian dollar has been the worst performer as traders increase their bets on an RBA rate cut at next week’s monetary policy meeting.
Commodities
Commodity prices have continued to come under pressure, led by iron ore prices which have fallen below the $50 level for the first time ever, as the battle for market share continues. Copper prices have also slid back.
Crude oil prices have continued their recent volatility seesaw by sliding back as Iranian nuclear talks continue in Switzerland, with Brent prices pushing back towards the lows of the week, while US prices slid back sharply from the $49 level from lows of $45.80 seen only yesterday. Any sort of deal with Iran could well bring forward the prospect of an easing of sanctions on Iranian output and as such mean a larger source of supply on an already oversupplied market.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.