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Stocks Rise As Traders Tread Lightly: No News Is Good News

By CMC Markets (David Madden)Market OverviewMay 19, 2017 16:04
uk.investing.com/analysis/stocks-rise-as-traders-tread-lightly-200190204
Stocks Rise As Traders Tread Lightly: No News Is Good News
By CMC Markets (David Madden)   |  May 19, 2017 16:04
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Europe

Stock markets in Europe are in positive territory. The turnaround that we saw yesterday is staying on track for now.

There hasn’t been any major developments in relation to Donald Trump, and dealers are cautiously picking up stocks. We still have a fair bit to go to make up for the losses earlier this week, but while the word ‘impeachment’ isn’t being bandied about as much, investors are taking on more risk.

This story hasn’t gone away, and for the time being it seems to be paused, but me mindful that it could flare up again.

Hikma Pharmaceuticals (LON:HIK) took a hit today when the company lowered its full-year revenue forecast to a range of $2 to $2.1 billion, from the previous guidance of $2.2 billion.The company has had a poor run recently, earlier this month the Food and Drug Administration (FDA) turned down its second application for an asthma drug. The share price has gapped lower twice in 10 days and the stock is now sitting at a six-month low. The bearish outlook will be tough to shake off.

Grainger (LON:GRI) announced a strong set of first-half numbers, the firm saw a double digit increase in profits and dividend, and the costs were cut by a healthy margin too. The rise in renters in the UK has helped the group, and even though the share price is marginally in the red, the rally over the past 10 years could attract some fresh buyers.

Close Bros (LON:CBRO) are continuing to do well. The financial services firm has had a solid performance across all aspects of the business. There is stable and steady progress in asset management, the securities division and the loan book is growing. The share price is up 65% since July last year, and with the trend line support it is receiving it could continue its bullish run.

US

The Dow Jones and the S&P 500 have gotten off to a good start this session and the optimism that we saw yesterday is still around.

The political situation in the US isn’t any clearer, and traders are treating this situation as no news, is good news.

The volatility index (VIX) has cooled considerably since the official closing bell in New York last night, and that is being replicated in the equity benchmarks. Investors love any opportunity to buy relatively cheap stocks and now that a lot of the fear has disappeared, the bargain hunters are moving in.

The moves we have witnessed in the past few days should not be forgotten about so quickly, as this scandal surrounding Mr Trump hasn’t gone away, it has just cooled off slightly.

FX

The GBP/USD was boosted by the impressive UK Confederation of British Industry (CBI) industrial order expectations report, which came in at a reading of 9 for May. That was a sizeable jump from April’s reading of 4, and it easily exceeded the consensus of 4. The dip in the US dollar added to the pound's performance today, as the greenback has fallen out of favour with dealers due to the controversy attached to Donald Trump.

The EUR/USD also had a positive session today an account of the decline in the US dollar. Higher than expected producer price index (PPI) numbers from Germany nudged the single currency higher but today’s move has more to do with the fall in the US dollar.

Commodities

The soft US dollar combined with the unstable political scene in the US has prompted traders to pour money into the gold market. Apart from yesterday’s pullback the precious metal has had a positive run over the past week and a half. Traders will be eyeing the $1265 mark, and should we move through it, then $1270 will be on the radar. If the greenback is weak and dealers are distressed about what is going on in Washington DC, gold may stay popular.

Brent Oil and WTI are both near one-month highs as the organisation of the petroleum exporting countries (OPEC) meeting next week is at the forefront of traders’ minds. Major oil producers like Saudi Arabia and Russia are keen to extend the production cut, and even a number of non-OPEC members are also of the same mindset. Whenever the titans of the oil producing world make their positions clear, speculators tend to follow suit. The oil market is also receiving a nice lift from the decline in the US dollar, which is acting as a nice added bonus for the commodity.

Disclaimer: 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.

Stocks Rise As Traders Tread Lightly: No News Is Good News
 
Stocks Rise As Traders Tread Lightly: No News Is Good News

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