UK and Europe
End-of-month repositioning and caution ahead of Friday’s US unemployment report led to mixed trading in European markets on the final day of a very volatile first quarter.
On the FTSE 100, Tui (LON:TUIT) led the gainers, whilst miners gave back some of the big gains made this week. A report showing the biggest outflows from British property funds since 2008 has seen REIT British Land drop towards the bottom on the UK equity benchmark.
TUI shares jumped after reporting an uptick in summer holiday bookings to destinations such as Spain and the Canaries to offset a drop in popularity of Turkey and Egypt after terrorist attacks. Other leisure and tourism stocks including InterContinental Hotels Group (LON:IHG), Carnival (LON:CCL) and Merlin Entertainments (LON:MERL) basked in TUI’s brilliance.
The sharp reversal in oil prices on Wednesday in combination with a four-week low in the price of copper has prompted some profit taking in UK-listed miners including BHP Billiton (LON:BLT) and Rio Tinto (LON:RIO).
US
US stocks were flat to slightly negative in early trading as traders sit on their hands ahead of Friday’s jobs report. The Yellen-put rally has lost some momentum on the last day of the quarter.
FX
The US dollar lost more ground on Thursday, taking the dollar index to a fresh five-month low to record its worst quarter in five years. Positioning had been so bullish on the dollar because of the outperformance of the US economy and the natural assumption the Fed would tighten policy in response. The assumption that the Fed would begin a steady stream of rate hikes in response to unemployment back at its natural rate has proven to be false.
Largely as a result of dollar weakness but also because of rising Eurozone inflation, the euro popped back above 1.14 to against the greenback for the first time since October.
A stronger than expected reading for UK GDP, which rose to 0.6% q/q, did little to assist the British pound, which is still wallowing in concern over Britain’s possible exit from the Eurozone.
Commodities
The price of crude oil rebounded on Thursday with news that China may overtake the US as the world’s biggest importer, supported by another drop in the US dollar. Brent crude remains near the bottom of a $3 trading range that’s been in place since breaching $40 per barrel. On Wednesday another build in US weekly crude inventories spooked oil traders into retreat, prompting fears that the WTI contract has put in a short-term top at $40 per barrel.
Copper prices bounced back from a four-week low but remain below $2.20 per lb, which had been supporting prices throughout March.
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