Europe
The FTSE 100 reached another record-high today as solid gains from the mining and utilities sectors drove the British equity benchmark to a new all-time high.
The rally in the euro on the back of the European Central Bank (ECB) minutes have dragged the DAX and CAC 40 into the red. The upbeat minutes from the ECB has prompted traders to be fearful that their loose monetary policy may be reined in sooner than traders expected. The Bank of Japan (BoJ) trimmed their bond buying scheme this week, and dealers are a bit wary the ECB may not be a lax as they initially let on.
Tesco (LON:TSCO) had a good third-quarter and Christmas, but they weren’t good enough to satisfy traders, as the figures come in below market expectations. The like-for-like (LFL) sales over the Christmas period increased by 2%, but traders were anticipating a jump of 2.8%. It was encouraging to see the retailer processed over 4 million transactions – a record. Online sale helped with the sales volume as they rose by 5% during the period. The share price is down 4.3% an account of the figures.
Marks & Spencer (LON:MKS) disappointed investors today as UK LFL sales for the 13 weeks until the end of December fell by 1.4%. The clothing division bore the brunt of the revenue decline, as the department saw a 2.8% drop in revenue, while food incurred a 0.4% decline. The retailer is at the higher end of the supermarket spectrum, and it blamed ‘tighter budgets’ from consumers as the reason for the slide in sales. The stock has fallen by 7.2% today, and has been in decline for the past seven months, and if it continues to fall it may target 290p.
US
Bullish sentiment is still doing the rounds in the US as the Dow Jones has notched up yet another all-time high, and the S&P 500 and Nasdaq 100 are higher on the session too. Equity traders are snapping up US stocks as the story yesterday that Beijing was going to cut back on the purchases of US debt transpired to be inaccurate. American stocks were sent lower yesterday, and that has offered some traders an opportunity to get into the stock market today.
US jobless claims climbed to 261,000, up from 250,000 and the producer price index (PPI) rate fell to 2.6% from 3.1%, which will keep down fears about interest rate hikes from the Federal Reserve. Today’s economic indicators from the US weren’t not too hot, but broadly speaking, they have been impressive and the health of the economy has been adding to the bullish sentiment.
Traders are looking ahead to the US earnings season, and tomorrow we will get updates from JPMorgan (NYSE:JPM), Wells Fargo (NYSE:WFC) and BlackRock (NYSE:BLK).
FX
EUR/USD was jolted higher by the positive ECB minutes. The update got traders thinking the central bank may not keep their monetary policy loose for an extended period. The economic indicators out of the region are very strong, but inflation is lagging behind, and central bankers it could spike up quickly, so they are tempering expectations now. The euro has been edging higher since November, and if the upward trend continue it may target 1.2100.
GBP/USD was lifted in the wake of the ECB minutes – as the US dollar sold-off. The pound was drifting lower this morning as the US dollar recovered from the ‘fake news’ story yesterday that China was looking to curtail its buying of US government bonds .The share sell-off in the greenback on account of the move in the euro, also helped sterling.
Commodities
Gold was given a boost by the sell-off in the US dollar, but the market is relatively range bound. The market has been pushing over the past month but it has been trading sideways recently. As global stock markets remain near record-highs, the gold market could find it difficult finding new buyers as risk-on is the popular sentiment. Gold hasn’t fallen out of its upward trend, it just appears to be taking a breather.
Brent crude and WTI continue to push higher as concerns about political stability in Iran, freezing cold weather in North America and falling oil stockpiles in the US are all playing into the rally in the energy market.
Brent Crude hit $70 per barrel for the first time since November 2014. The price target was being eyed by Brent for some time, and even though OPEC production cut extension in November formed the basis of the move higher, additional fear factors finally pushed it across the $70 line.
DISCLAIMER: CMC Markets is an execution only 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.