CMC Markets

Europe

After a nice trip higher on Friday, European stocks pulled back slightly on Monday while waiting for any developments over the future of Greece’s bailout program from the latest Eurogroup meeting this evening. Volumes were light with US markets closed for Presidents Day.

A disappointing Japanese GDP that nonetheless saw Japan’s economy return to growth in the fourth quarter set the tone of small losses on a day bereft of any major news releases.

The situation in Greece remains a matter of political game theory which should result in compromise in the short-term but could go either way. Comments on the likely success of the debt negotiations from German Finance Minister Schauble and Greek FinMin Varoufakis are getting a bit samey and proving to be less and less market-moving.

UK

UK shares flat-lined on light volume ahead of the Eurogroup meeting and a week full of UK economic data including the latest Bank of England minutes as well as unemployment and retail sales data. It was M&A news and cost-cutting at supermarkets that dominated price action on Monday.

Takeover talk helped Sabmiller (LONDON:SAB) to the top of the FTSE 100 while outside of the main benchmark shares in 888 holdings plummeted after the company failed to reach an agreement with shareholders and William Hill over a possible deal.

Tesco (LONDON:TSCO) shares were higher on the prospect of 10,000 jobs getting slashed as part of the supermarket’s restructuring to allow a drop in grocery prices to compete with the discounters. Morrison’s shares responded well to a deeper cut into the prices of staple items in its own latest discounter-fighting move.

There is a growing feeling amongst investors that the worst is behind the UK supermarket industry. The latest Kantar data was demonstrative; market share was still being lost by the big four but at a declining rate thanks to the cost-cutting that’s already taken place.

US

US markets were closed for Presidents Day.

FX

The US Dollar was mostly weaker on Monday, following through from the worse than expected decline in retail sales and drop in consumer confidence reported at the tail end of last week.

Any effects from hawkish comments by BOE MPC member Martin Weale over weekend were short-lasting as GBP/USD fell back below 1.54 ahead of key data this week.

Underwhelming trade figures that demonstrate an inability of European exporters to fully take advantage of the weaker euro left EUR/USD essentially unchanged.

With Brent crude oil back above $60/bbl and showing signs of a bottom; the Russian ruble and Norwegian krone are also starting to indicate a possible bullish reversal on the prospects of higher oil industry revenues.

Commodities

Some safe haven flows on Greek debt worries and a confluence of technical support at $1,220 per oz helped Gold towards its third session of gains after three weeks of declines.

A Chinese New Year lull in copper has seen prices rise slightly on reduced volume. $2.66 /lb is the Jan 16 peak that’s capping the move higher for now, above there could see a move to $2.80.

The potential curtailment of supply from Libya after the Egyptian bombing of Islamic State in the country and bullish comments from the Kuwaiti Oil Minister helped sustain the short squeeze in oil prices on Monday. The break above $60/bbl in Brent Oil on Friday was significant and might foresee a new price range that could extend as high as $70.

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