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Daily Live Market Analysis and Commentary By XTB

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This topic contains 83 replies, has 3 voices, and was last updated by XTB Research Team XTB Research Team 1 month, 3 weeks ago.

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  • #28738

    Hi Forum Members!

    Here you can find our latest market commentary of Major Currencies, Indices and More.

    We hope that this information will be helpful for your trading. Please don’t hesitate to contact us if you any questions.

    Kind Regards
    XTB Research Team
    ——————————————————————————-

    • This topic was modified 7 months, 2 weeks ago by XTB Research Team XTB Research Team.
    • This topic was modified 7 months, 2 weeks ago by Jacob Maas Jacob Maas.
    • This topic was modified 7 months, 2 weeks ago by Jacob Maas Jacob Maas.
    • This topic was modified 7 months, 2 weeks ago by Jacob Maas Jacob Maas.
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  • #37082

    XTB Market Talk 31st May 2017
    By XTB Research team

    GBP falls as poll suggests Tories may lose majority
    A survey from YouGov that suggests the Conservatives will lose their parliamentary majority in the upcoming general election has caused some softness in the pound, which has fallen below the 1.28 handle against the US dollar to trade close to it lowest level in six weeks. The fall in sterling has boosted the leading UK stock market with the FTSE 100 coming within a whisker of posting another all-time high this morning.

    Conservatives continue to slide
    Almost since the June 8th election was announced by PM May in the middle of April there has been a near constant slide in the projected number of seats that would be won by the Conservative party. The initial forecasts saw gains in excess of 100 widely touted with the snap election seemingly a decisive move to take advantage of a favourable viewing of the incumbent party as well as benefitting from a dysfunctional opposition. However a series of blunders on the behalf of Tories – with a bodged manifesto and policy flip-flopping that saw the “strong and stable” mantra rolled out by the government derided as “weak and wobbly” – coupled with a positive response to Labour’s proposed policies has led to some major concerns that not only will the Conservatives not significantly increase their majority, but that they may in fact lose it all together.

    Pound lower, but selling controlled
    The latest poll from YouGov projected a 20 seat loss for the Tories which is the worst of all polling results so far and would see them 16 seats short of an overall majority in the Commons. Should this occur the fallout could be major with a hung parliament or possible coalitions seeing the opposite of a united political front going into the Brexit negotiations with the EU. This would likely be seen as a sizable shock to the markets and could lead to not only the handing back of gains seen since the election was called, but potential further downside in the pound. Given the revelation in last night’s poll the depreciation in the pound has been fairly small and this could well be seen as a sign that the markets still aren’t expected the Conservatives to lose power. A closer look at the poll itself shows a large margin of error with projections ranging from 345 seats for the Tories on a good night to as few as 274 on a worst case scenario. The expected figure of 310 is the mid-point of this range and assumes a normal distribution of outcomes which could well be a false assumption. Going forward alternative polls will now garner even more attention and whilst the markets seem to be still pricing in a Conservative victory, albeit by a more narrow margin than initially thought, the potential for an upset is clearly rising and the outcome no longer looks as much of a foregone conclusion as it did on 18th April. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #36480

    XTB Market Talk 17th May 2017
    By XTB Research team

    UK unemployment continues to fall
    The latest employment data has shown continued strength in the UK labour market with the unemployment rate falling to 4.6% – the lowest level since 1975. The claimant count change also dropped and although there was an upward revision to the prior reading on balance the overall picture is a strong one. One aspect that may temper the report on an individual level is that whilst average earnings rose slightly, due to the faster increase in the pace of inflation real wages have have fallen at their fastest pace in over two and a half years. The market reaction has been fairly muted despite all three aspects seemingly supportive of sterling, with the pound not making any substantial gains against the US dollar despite some Trump-induced weakness in the buck.

    Comey memo put more pressure on Trump
    Reports last night of a leaked memo from former FBI director James Comey on a meeting with Donald Trump have caused quite a shock in Washington and there’s been a notable reaction in the markets. Safe haven assets such as Gold and the Japanese Yen have seen some buying since the revelations were announced with the memo apparently stating that Trump had encouraged Comey to not thoroughly scrutinise fired aid Michael Flynn’s role in the ongoing investigation into Russia’s efforts to influence the 2016 campaign. Whilst this memo is yet to be confirmed it is another unwanted development for Trump who has come under increasing scrutiny in the past week or so as the Russia story refuses to go away. Trump has always maintained his innocence relating to any untoward contact with the Kremlin and whilst the official investigation remains ongoing, the handling of the latest developments is arguably causing the greater concern.

    White House not singing from the same hymn sheet
    The White House seem incapable of even sticking to the same coherent story in the past week and the mishandling of this is raising serious questions about the ability of Trump and his administration to govern effectively. Even if the Russia investigation returns a verdict which showed no wrongdoing on Trump’s behalf, his actions in the handling of it have provided more ammunition for those who believe he is unsuitable for the role and that a lack of experience in holding high-level public office will hinder his performance. Whilst we have seen a reaction in Gold, the Japanese Yen and the US dollar (with a trade weighted index of the greenback falling to a seven-month low yesterday) the moves are still relatively small in nature and Wall Street is still expected to open not far from record levels this afternoon. With the conclusion of the Russia investigation seemingly still some way off, Trump would be wise to attempt to go at least a day without any more negative press and should perhaps refrain from sticking his head above the parapet once more and adding to problems that are largely avoidable and his own in the making. However, Trump has shown little by the way of restraint since his unexpected victory in November and it would maybe be less surprising if upon awakening in the coming hours he takes to Twitter and adds more fuel to the recent fires that are threatening to rage out of control.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #36006

    XTB Market Talk 8th May 2017
    By XTB Research team

    French elections see muted reaction
    Last night Emmanuel Macron was declared the next French president after convincingly beating the far-right Marine Le Pen. The news itself didn’t come as much of a shock at all for the markets, with a victory being largely priced-in after a strong showing from Macron in the first round a fortnight before. In fact, after an initial move higher which saw the Euro break above the 1.10 handle against the US dollar to trade at levels not seen since the night of the US election, there has been something of a pullback. European indices are in the red too with the CAC40 and Dax30 paring recent gains which saw both benchmarks close at record highs on Friday. Whilst these markets are in negative territory today they remain firmly elevated from the levels seen heading into the first round of voting just over two weeks ago, and the price action could be described aptly by an old trading adage; buy-the-rumour-sell-the-news.

    “No willingness” to punish Britain
    From a UK perspective the victory for Macron is likely seen as the most favourable outcome, even if it strengthens the EU for the Brexit negotiations. Theresa May sent her congratulations last night and whilst the Pro-EU Macron has stated that he will support a hard line approach from the continent in discussions relating to the UK leaving the bloc, an aide has said that he has no desire to punish Britain. The UK general election will take place in a month today and the focus on this amongst market participants will likely ramp up in the coming weeks. The pound and FTSE remain well supported at the moment with “Super Thursday” by far and away the biggest scheduled event for these assets this week. The Bank of England seems unlikely to announce any material changes to its monetary policy in just a few days time but the quarterly inflation report could well prove to be market moving. Recent CPI figures have persisted above the Bank’s 2% target threshold and with several pieces of “soft” data showing a fair degree of confidence in the economy, Governor Carney may take this opportunity to err on the hawkish side which could see the pound add to recent gains and move back above the 1.30 handle against the US dollar. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #35888

    XTB Market Talk 4th May 2017
    By XTB Research team

    UK Services PMI beat expectations
    The latest UK services PMI release has beat expectations and completes a hat trick of better than expected UK data points in successive days. The print itself of 55.8 marks the second fastest pace of expansion seen since the Brexit vote, and whilst the repercussions of that decision continue to dominate the headlines there appears to be little by the way of ill-effects on the economy. These PMI releases are widely viewed as they represent a survey of purchasing managers, who are believed to be some of the most sensitive to the prospects of the underlying economy in business-making decisions. Detractors may state that, as this is a survey, by nature it represents a “soft” data point and the “hard” data seen recently such as retail sales and GDP has shown some weakness. However the “hard” data is lagging and backward looking whilst this week’s releases include focus on forward looking expectations and the signs are clear that those at the sharp end of business remain positive about the economic prospects going forward.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #35388

    XTB Market Talk 24th April 2017
    By XTB Research team

    Risk-on as traders bet on Macron shoe-in
    Markets have begun the week in a bullish mood following the news that Emmanuel Macron and Marine Le Pen have advanced to the final round of the French presidential election. The FTSE100 has soared almost 2% after adding 130 points at the time of writing, whilst the Euro has rallied across the board to trade at a 5-month high against the US dollar as traders are seemingly of the belief that this is a strongly positive outcome.

    Macron to become youngest French president?
    Reading more closely into these moves it is apparent that the vast majority in the markets are already firmly of the belief that the Centrist candidate – and more importantly Pro-EU – Emmanuel Macron will be announced as the next French president within a fortnight. The French stock market roared higher on the open this morning to trade at a record peak, with exchanges in Frankfurt, London and Tokyo also warmly greeting the news and giving little hope to le Pen and the Front National.

    Too far, too fast?
    Whilst Macron moving into the Elysee Palace is the most positive outcome for markets the size and scale of the moves suggest more than a whiff of irrational exuberance. Let’s not forget that the outcome of the first round was a close resemblance of polls in recent weeks and with another round still to come it may not quite yet be as much of a foregone conclusion as traders are betting. Even if this assumption is correct, Macron may not have a free run once he takes office with the specifics of the French electoral system meaning that it will still be months before his support in parliament is known and there’s a very real possibility that he fails to achieve a majority. Cynics only need to look across the Atlantic for a prime example of an anti-establishment president failing to deliver on pre-election promises which at the time of the result, markets assumed were a done deal. Despite his tweets over the weekend, Trump is still struggling to force through his tax reform plans and traders will eagerly await the latest announcement on this matter this coming Wednesday. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #35193

    XTB Market Talk 19th April 2017
    By XTB Research team

    UK markets stabilise after election shock
    Following some turbulent trade yesterday the FTSE 100 and sterling are rather more subdued this morning, as markets digest the potential impact of the unexpected snap election going forward. The pound is edging higher against most its peers but remains below Tuesday’s highs whilst the FTSE is lower by 5 points at the time of writing.

    Sterling strength has more room to run
    The pound reacted positively to Theresa May’s announcement yesterday morning and rallied strongly throughout the day to trade at its highest level against the US dollar since early October. Cable remains above the 1.28 level this morning, and with the latest positioning data showing a near record-level of net short positioning there could be more legs to this move yet. The price action yesterday was suggestive of some short covering with the rally higher grinding steadily throughout the day, before a capitulation in the evening saw a spike of approximately one percent in under a minute. This was likely caused by a large short position covering once 1.28 was broken above. Whilst far smaller in scale than the flash-crash last year, nonetheless the move serves as a reminder that heightened levels of volatility going forward are likely.

    Greater power to allow softer Brexit?
    The main fundamental reason for the sterling appreciation was seemingly the concept that a greater majority amongst MPs would allow PM Theresa May more leeway when it comes to negotiating the Brexit terms with Europe. At present the conservatives enjoy a narrow majority of just 17 and this would mean that May can’t afford to ostricise too many Eurosceptic backbenchers on the Brexit terms. Therefore the move to call a snap election seems strategically sound and a wise choice given that recent polls suggest that the outcome would yield a majority in excess of 100 MPs and afford greater political maneuverability. This school of thought however rests on the polls proving to be an accurate gauge and at present the decision appears to be a calculated risk worth taking, given that her expected lead is the largest in over a generation. However, as a note of caution the last time Britain called a snap election was in 1974, when Conservative Prime Minister Edward Heath was battling striking coal miners. Rather than strengthen his position the result was a hung parliament and even though this outcome appears unlikely this time, out it remains a possibility and would represent the second major miscalculation by a PM in as many years. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #35124

    XTB Market Talk 18th April 2017
    By XTB Research team

    Theresa May surprise market with snap general election
    Theresa May has surprised market this morning by calling a snap general election on June 8th. The pound has recovered from some earlier jitters when news of a statement from the PM sent sterling falling to its lowest level of the day as the rumour mill went into overdrive as to what the announcement may pertain. Since the election was confirmed sterling has moved off its lows and recouped the vast majority of the decline.

    The FTSE 100 has continued to drop and added to earlier losses since the election was confirmed with stocks already under pressure after reopening lower following the long weekend.

    The announcement itself marks a major U-turn for the government with a spokesman ruling out an early election just a month ago. With support for the opposition at historically low levels it appears that May has moved decisively to strengthen her hand in terms of support in the House of Commons as the Brexit negotiations begin. It seems that May believes that the election will deliver a greater majority amongst MPs than the current balance and therefore is looking to press home her advantage in order to attain greater political power going forward.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #34886

    XTB Market Talk 11th April 2017
    By XTB Research team

    UK inflation remains above target
    The main economic release from the UK this week has shown that the core price index (CPI) has risen by 2.3% year-on-year for the second successive month. The release has boosted the pound which has risen in recent minutes, whilst the FTSE 100 has pulled off its highest level of the day after earlier posting its highest level of the month.

    Inflation remains above target
    Further evidence of rising inflation in the UK was provided this morning with the most widely viewed metric, the consumer price index (CPI), matching last month’s reading in coming in at the highest level since 2013. There has been a marked increase in this data point since the Brexit vote last summer, with the June release of +0.3% being beaten by progressively higher readings. In fact, only the November reading of +0.9% has shown any decrease on the prior number with a clear uptrend taking hold. One of the main side effects of an extremely accommodative monetary policy and sharp depreciation in the local currency is an increase in inflationary pressures and given BoE Governor Carney’s stated “limited tolerance” for above target inflation, we could see a hawkish shift amongst the central bank rate-setters in the not too distant future.

    Gold miners rise
    The best performing stock on the FTSE 100 this morning is Randgold Resources, with the gold miner rising by just shy of 2%. This morning’s rise comes after a similar size decline on Monday as the stock continues to battle around its year-to-date highs. Fellow miners Rio TInto and Fresnillo are also gaining and driving the broader index higher. Airlines are also joining the move up with easyJet and BA parent, International Consolidated Airlines, showing decent gains. As far as the losers are concerned RBS resides at the foot of the index and is lower by an even 1% at the time of writing. Financial stocks in general are amongst the biggest laggards today with Barclays, Lloyds and Provident Financial also in negative territory. Some of the biggest US banks are set to report their latest results this week with hopes fading of a stellar set of earnings. Lenders have been amongst the best performing shares across the Atlantic during the “Trump rally” as a combination of less regulation and higher rates has led many investors to believe that margins will improve. The season kicks off on Thursday with JPMorgan Chase, Citigroup and Wells Fargo all set to release results prior to the opening bell.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #34835

    XTB Market Talk 10th April 2017
    By XTB Research team

    Pound rises to start the week
    Sterling is gaining value this morning as the currency looks to put last week’s disappointing data set behind it and recoup some of the recent declines. The FTSE 100 is little changed and has experienced fairly quiet trade since the open.

    BHP Billiton spikes higher
    The best performing stock on London’s leading index this morning is BHP Billiton which has risen a little more than 5% after the release of a plan from an activist investor to unlock shareholder value by delisting from the London Stock Exchange. Elliott Advisors has said that the mining firm could increase value attributable to shareholders by more than 50% for London shareholders. The rise in price is boosting other stocks in the sector with Rio Tinto and Glencore both gaining since the open.

    Gold fails at key technical level
    A sharp reversal in Gold futures after the London close on Friday has seen both Randgold Resources and Fresnillo begin the week lower, with the precious metal falling after some hawkish comments from Fed member Bullard. The market spiked to its highest level since the night of the US election early on Friday as the US responded to the Syrian chemical weapons attack with an assault on an airbase. A major breakout above the 200-day SMA seemed on the cards when the US jobs report showed the lowest reading since June 2016, but the fact that the market closed back near its lows perhaps reveals an underlying weakness and could suggest that the market has topped for the time being.

    Yellen steps into the spotlight
    One of the main takeaways in the release of last week’s minutes from the most recent monetary policy meeting of the US central bank was the discussion amongst members of reducing the balance sheet. Bullard commented on Friday that he believed the reduction could begin this year and this additional step in tightening monetary policy alongside expected increases in the base rate could lead to a boost in the buck and weakness in precious metals. This evening just after the Wall Street close Fed chair Yellen will deliver a speech at the University of Michigan and any further comments relating to balance sheet reduction could cause moves in the greenback and dollar-denominated commodities.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. ​

  • #34557

    XTB Market Talk 5th April 2017
    By XTB Research team

    GBP reaction on UK Services PMI
    The latest data on the UK services sector has come in better than expected and negates the previous releases this week which missed expectations. The pound has reacted positively to this morning’s number, which has the greatest explanatory power of all the week’s releases in providing a gauge on the UK economy, and has rallied more than 50 pips to trade back near the 1.25 handle against the US dollar.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #34389

    XTB Market Talk 31st of March 2017
    By XTB Research team

    Markets keep calm and carry on
    Despite the intense media scrutiny on this week’s Brexit developments, the markets seem to have seen through the noise and traded in a relatively subdued manner. This shouldn’t really come as much of a surprise as the triggering of Article 50 has long been touted for this week and there were no real shocks in the comments from either party. The FTSE 100 is lower by 37 points on the day, but remains close to last week’s closing level after recovering from a soft start on Monday. The pound is also looking like it will close not far from last week’s levels, although it is a little higher on a trade weighted basis and the fact it hasn’t sold this week could reveal some underlying strength in the currency.

    UK economy grew 1.8% last year
    This morning saw the final GDP figures for last year released with a 0.7% increase seen in Q4. Overall this means that the 2016 GDP figure is a respectable 1.8% and the level of economic activity remains a comfortable distance from a recession. Even though this data is lagging it confirms the now widely-held belief that there has been little sign of any significant slowdown in the economy since the EU referendum last summer. With this week seeing Brexit become a reality the real work will begin with the terms of the separation and future trade deals set to be negotiated in the coming years. Taking a step back and looking at the long run April has historically been a good month for the pound and this seasonality, coupled with high levels of speculative shorts, could well see sterling attempt to recover some of the ground lost in the past nine months.

    Miners drag FTSE lower
    Today’s declines seen in the FTSE 100 are largely due to some fairly strong selling that has been seen in the mining sector with Anglo American, Fresnillo and Rio Tinto all firmly lower on the day. However the worst performing stock is Old Mutual with the insurance company seeing a decline close to 7% as the political uncertainty in South Africa wrangles on. After days of speculation the country’s finance minister, Pravin Gordhan, has been sacked and the Rand has fallen to its lowest level against the US dollar in 2 months.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #34320

    XTB Market Talk 30th of March 2017
    By XTB Research team

    Brexit made official; what next?
    Now that the UK has made formal their intention to withdraw from the EU, a two-year window of negotiations has begun during which both parties will furiously attempt to thrash out the details of the separation. As was widely expected, there was minimal reaction in the markets to Wednesday’s news with the pound oscillating around the 1.24 handle against the US dollar whilst the FTSE recovered from some early weakness to end the day little changed.

    Two stages to the negotiations?
    One of the first matters to be discussed at the negotiating table will be the sequence in which the negotiations themselves will play out. The UK has made clear its preference for simultaneous discussions relating to the two main topics at hand, namely the terms of the divorce settlement and the future trading relationship between both parties. However there’s a growing feeling that the EU is unwilling to discuss future trade deals until the details of the separation are clear and they may look to leverage their position here to gain a more favourable deal. Prime Minister Theresa May is expected to publish a white paper on the Great Repeal Bill today which should outline the manner in which UK law will assume all the EU rules and regulations that applied at the time of Brexit. This is seen as a positive for business as it will create certainty for business over the short-term because the existing rules will not suddenly change.

    Accounting woes continue for BT
    One of the worst performing stocks on the FTSE 100 this morning is BT, with shares in the telecommunications firm lower by around 1.5%. The firm is trying to find a new auditor after deciding to ditch PWC in the wake of a £530m accounting scandal in the Italian arm of its business. Morrisons Supermarkets is enjoying a decent rise in its stock this morning of almost 2% after an upgrade from US broker Bank of America Merrill Lynch. Advertising giant WPP has also benefitted from an upward revision to its rating from the same broker and is up by almost 1% on the day. Overall the leading UK stock index is little changed this morning and lower by 2 points at the time of writing as it seeks to recoup some of last weeks losses.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33740

    XTB Market Talk 17th of March 2017
    By XTB Research team

    FTSE set for record weekly close
    It’s been yet another good week for the FTSE 100, with the leading UK benchmark set for a record weekly close. The pound is also rising and after some weakness early on in the week is looking to end near its high after shrugging off the drop from the passing of the Brexit bill.

    Financials look to join the rally
    Royal Bank of Scotland and Barclays are both moving higher today as stocks in the financial sector are looking to join the rest of the index in posting gains this week. Housebuilders are also in the green with Barratt Developments and Taylor Wimpey gaining by 1.22% and 1.14% respectively. The gains are likely due in part to a positive set of results for Berkeley Group which has seemingly led to investors in the sector to view their future prospects as slightly more upbeat. Despite a 16% drop in new home sales the group has described inquiry levels as “robust” and stated that pricing continued to be “resilient”. The broader index is pretty much flat on the day but Thursday’s gains saw a push up into uncharted territory and barring a dramatic late sell-off the FTSE 100 will post a highest ever weekly close. There is however some stocks that are declining on the day with some notable weakness seen in the retailers. Marks & Spencer and Next are amongst the worst performers with both set to end a quiet week on their lows.

    Pound recovers after soft start to the week
    The pound is gaining against the majority of its peers this morning as the currency adds to gains seen in recent days. The week started off on the defensive for sterling, but after posting trading down to the low 1.21s against the US dollar on Tuesday there has been a notable recovery. It remains too early to call the bottom in the market but the price action has certainly been more constructive in recent sessions and there is some suggestion that the worst could be behind us for the time being. With expectations for the future path of the US and UK base rates having been at almost polar opposites going into the central bank meetings, this week has seen some moderation away from these extremes with the Fed appearing not quite so hawkish and the BoE not as dovish.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33694

    XTB Market Talk 16th of March 2017
    By XTB Research team

    Bank of England rate decision commentary
    The latest policy meeting has seen the Bank of England keep the base rate at a record low of 0.25% but the vote wasn’t unanimous. Kristin Forbes was the sole dissenter and the first MPC member to vote against keeping the rate at the current level since the bank cut in August. This has seen an immediate pop higher in the pound with the GBPUSD rising around 50 pips and breaking up through the 1.23 handle.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33687

    XTB Market Talk 16th of March 2017
    By XTB Research team

    FTSE soars to record high
    The FTSE 100 has rallied strongly since the open this morning with the index receiving a double boost from the US and Netherlands since Wednesday’s cash close. The benchmark is higher by approximately 70 points, whilst the pound is seen falling lower against most its peers.

    Anglo American surges on £2bn investment
    The mining sector is leading the charge into uncharted territory for the leading UK benchmark with some substantial gains seen in Anglo American, BHP Billiton and Glencore. These three large mining companies occupy three of the top five positions on the index with the sector as a whole rising after news broke that Indian tycoon Anil Agarwal has invested £2bn in Anglo American. The industry is continuing its recovery which began in 2016 after several years of struggles amidst a slump in commodity prices, and the announcement of a substantial investment from Mr. Agarwal shows a growing confidence in the mining sector.

    US dollar drops after Fed rate hike
    Wednesday evening saw a fall in the US dollar despite a rise in the Fed funds rate being announced, as it appears once more that markets are questioning the forward guidance given by the US central bank. There were a few upward revisions to the FOMC’s dot plot, however the median levels remained unchanged for this year and next which led to a fairly sharp drop in the buck. The reaction was similar in fashion to that seen after the latest US jobs report, where a seemingly positive development was met by skepticism and a softening of the US dollar, which begs the question of how high market expectations were going into these events and what would have been required to see the greenback appreciate. The drop in the US dollar saw precious metals rise with Gold surging around 2% and boosting both Fresnillo and Antofagasta Holdings. Stock in these companies has risen by approximately 7.1% and 6.6% respectively.

    Bank of England to adopt more hawkish stance?
    The Bank of England will announce the outcome of its latest monetary policy meeting at Midday, with rates expected to be kept unchanged at 0.25%. However the Bank’s assessment of the economic outlook in the accompanying statement could make for interesting reading with the last meeting showing it remained steadfast in holding its dovish view. Since then the pound has gradually made its way lower as the Brexit bill has meandered through the houses of parliament and is now set to be made into law. Article 50 now seems nailed on to be triggered before the end of the month, and whilst it may open up a can of worms in itself the general feeling amongst market participants is that the Brexit procedure is progressing on track. This may allow the BoE a little more leeway in its stance and a slight hawkish tweak to the statement, something similar to the “limited tolerance” for above target inflation comment seen in December, is a possibility which could provide some support to the pound.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33579

    XTB Market Talk 15th of March 2017
    By XTB Research team

    UK jobless rate falls to 42-year low
    This morning saw the release of the latest UK employment data, showing a drop of 31,000 to 1.58 million for the number of jobless claims. This means that the economic indicator has declined to its lowest level since 1975. Despite this upbeat data point the pound has moved off its earlier highs as wage growth continues to disappoint. The FTSE 100 is looking to recover Tuesday’s losses and is higher by 21 points at the time of writing.

    Wages take the shine off strong labour market data
    In addition to the fall in the jobless rate the fact that 315,000 more people are in work compared with a year earlier suggests that the UK’s labour market remains resilient despite all the uncertainty surrounding leaving the EU. The unemployment rate ticked lower by 10 basis points to 4.7% in another positive development, but the markets haven’t reacted kindly to the release. This is likely due to the average earnings index which fell to 2.2% from 2.6% previously and came in below consensus forecasts. The stubborn nature of wage growth to support the improvement of other labour market metrics in recent data has seen traders remain cautious in entering long positions in the pound. Sterling has recovered somewhat since posting its lowest level in almost two months against the US dollar yesterday and received a boost this morning with a poll on Scottish independence suggesting that the majority would vote to remain.

    Busy economic calendar ahead
    The next 36 hours are jam-packed with potentially major market moving releases as no fewer than four central banks announce their latest monetary policy decisions over the course of the next day and a half. The US Federal Reserve set the ball rolling at 6pm tonight, where it is widely expected to increase rates for a third time in just over a year. Whilst derivatives markets imply that this move is almost entirely priced in, there is still a good chance that traders may experience high volatility around the event. The economic projections – in particular the dot-plot of voting member’s forecasts for future rates – are sure to garner close scrutiny as traders attempt to decipher further clues as to the future rate path of the Fed. Chair Yellen’s press conference also has the potential to move markets and a further reiteration of her recent shift to a more hawkish stance could spark a rally in the buck. The Bank of Japan, Swiss National Bank and Bank of England follow their US counterpart overnight and through the European session tomorrow, however little by the way of any material change in policy is expected by these. Nonetheless the accompanying statements have the potential to drive flows in individual currencies and the local stock markets.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33536

    XTB Market Talk 14th of March 2017
    By XTB Research team

    Sterling slumps as Brexit bill passed
    The pound has fallen to its lowest level against the US dollar since Theresa May’s Brexit objective speech in mid-January after Parliament finally passed the Brexit bill overnight. The depreciation in sterling has boosted stocks with the FTSE 100 higher by 12 points and the benchmark remains within striking distance of all-time highs.

    Peers back down over amendments
    This morning the Brexit bill has headed for Royal Assent and is expected to be passed into law before the day is out. The bill allows the government to trigger Article 50 which would serve as a formal notification of the UK’s exit from the EU in two years’ time. Whilst there has been some frustration as the bill has been ping-ponging between the lower and upper houses for the past couple of weeks, the news that the House of Lords had backed down overnight paves the way for the government to meet their self-imposed deadline of triggering Article 50 before the end of March. Despite the political tit for tatting, this was seemingly the most likely outcome and even though the pound has dropped on the news it shouldn’t come as a major shock to traders. The selling in sterling could be described as measured so far today with declines ranging from 0.5-0.7% against most major peers. Even when Article 50 is triggered the market shouldn’t treat it as too much of a shock as this has been in the pipeline for many months and Theresa May likely imposed a deadline on the event in an attempt to reduce uncertainty as much as possible.

    BoE member Hogg resigns
    Charlotte Hogg, the deputy governor for markets and banking at the Bank of England, has handed in her resignation today following a conflict of interest scandal. The issue arose while Ms. Hogg was being questioned by MPs after she told them her brother had a senior role at Barclays. The Bank’s code of conduct, which she contributed to the drafting of, states that employees must declare any such connections. Despite her resignation, she will still vote for the first and last time on monetary policy at this week’s meeting, which is widely expected to see interest rates kept on hold at a record low.

    Prudential leads the risers
    The best performing stock on the FTSE 100 this morning is Prudential, with the insurer rising around 3% after reporting a 7% rise in group operating profits. The increase was largely thanks to the strong levels of growth seen in its Asian business, which rose by 28% to £1.5bn. Other stocks enjoying moves higher are easyJet, Severn Trent and Rolls Royce with all three just shy of posting 1% daily gains. At the other end of the index the banking sector is seeing some selling with RBS, Lloyds and Barclays all in negative territory. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33472

    XTB Market Talk 13th of March 2017
    By XTB Research team

    Article 50 to be triggered imminently?
    There’s a growing sense of expectation amongst market participants and political observers that the formal process for the UK to leave the EU is set to begin this week, with some expecting Article 50 to be triggered as soon as Tuesday. The pound is rising against the majority of its peers this morning whilst the FTSE is little changed.

    MPs to vote on amendments
    Later today, the House of Commons is expected to reject the two changes made to the Brexit bill in the House of Lords. Should this occur, the bill will then pass back to the upper house of government to see if Peers will accept the rejection or continue the ping-pong process. Parliament could sit through the night to try and reach an agreement with time also being allocated in the coming days should the process be frustrated. Once both houses are in agreement as to the text within, the EU withdrawal bill could then complete its final stages and go for Royal Assent after which the government can trigger Article 50. Feasibly this could happen by the end of play tomorrow, however it seems more likely that Wednesday or Thursday will see the UK provide the formal notification of their intention to withdraw from the EU. Since the start of the year the pound has reacted positively to any progress made along the Brexit path and the currency could see further gains ahead once Article 50 is triggered.

    Commodity stocks rise on pullback in the buck
    The best performing stocks on the leading UK stock index this morning come form the mining sector with Fresnillo, Anglo American and Rio Tinto all rising by more than 3% since last week’s close. Since a strong US jobs report on Friday the market is now seemingly discounting a Fed rate hike this week as a given and paying more attention to the probability of future increases which remain far less certain. This uncertainty can be seen in the US dollar and Gold in dollar terms with the former declining and the latter gaining. Together this has provided the boost seen for the majority of commodity stocks although it has done little for Oil majors, with BP and Royal Dutch Shell moving lower after last week saw the oil price suffer its largest decline since November. Rising US inventories provided the catalyst for the drop, although the market reaction to a ninth successive increase in the DOE stockpiles was sharp enough to suggest that it could have been the straw the broke the back of oil bulls clinging to hopes that output deals would finally end the global supply glut.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33331

    XTB Market Talk 10th of March 2017
    By XTB Research team

    NFP offers no reason to delay rate hike

    The US added 235k jobs to the economy in the past month, with the latest non-farm payrolls report indicating continued strength in the labour market. As well as the headline reading beating the consensus forecast there was also an upwards revision to the prior print in a report that contains very little by the way of weakness. Average earnings ticked higher whilst the unemployment rate fell back to 4.7%. Expectations for a rate hike from the Fed next week were already high heading into this afternoon’s release, and given the strong nature of the report a third increase in the hiking cycle now looks like a foregone conclusion at next Wednesday’s announcement. Donald Trump was clearly impressed with the release, with the US president retweeting a post on the data shortly after it was announced.

    Records continue to tumble for US stocks
    Despite not managing to post a fresh all-time high so far this week, US stock markets continue to break records. The market has now gone eight years since recording its post-financial crisis low in early March 2009 and this week has also seen both the S&P500 and Dow extend their streak of avoiding a 1% decline. It is now 102 trading sessions since these indices experienced a drop greater than 1%, which marks the longest winning run since December 1995 for the S&P500 and September 1993 for the Dow.

    Oil set to end the week bad week near its lows
    The price of crude has tumbled this week after Wednesday’s DOE report showed a far bigger build than expected in US stockpiles. Brent Oil is set for its lowest weekly closing level since OPEC announced that it had agreed upon a cut in its output in late November. The benchmark has declined by approximately 7% in the past few sessions and by breaking below a fairly major technical level, there is some suggestion that further declines are in store.

    Euro rising on hawkish ECB hints
    Yesterday’s ECB rate decision was a fairly placid affair for the markets compared to previous events with the moves not as sharp and severe as they often can be. Now the dust has settled however there does appear to be a steady bid in the Euro with the single currency moving up to its highest level against the pound this afternoon in almost two months. When the decision to extend the current QE programme, albeit at a reduced pace of purchases, was announced in December, Mario Draghi was at pains to stress during his press conference that the move didn’t constitute a tapering off of the ECB’s monetary stimulus. The Italian adopted a slightly more hawkish tone yesterday and whilst the current easing doesn’t technically constitute a taper, there is a growing feeling in the markets the central bank are edging closer to the normalisation of their monetary policy. This has seen yields on German government debt rise and proved supportive of the Euro.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33302

    XTB Market Talk 10th of March 2017
    By XTB Research team

    UK data came in on the soft side
    The latest economic data for the UK has come in on the soft side, with manufacturing production and industrial production both contracting in January. The manufacturing number in particular could be seen as a cause for concern with a 0.9% month on month decline matching the worst reading since the Brexit vote. As these data points are lagging in nature they don’t always have a major impact on the markets, but nonetheless they add to recent worse than expected PMI data for the UK in suggesting that the economy isn’t quite firing on all cylinders. Speaking of lagging, this recent softness in the UK data comes at a time when GDP forecasts from both the Treasury and the OECD are being revised higher and suggests that perhaps both bodies are a little too optimistic on the near term prospects for the economy given the seemingly imminent triggering of Article 50.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33251

    XTB Market Talk 9th of March 2017
    By XTB Research team

    Oil price tumbles as supply glut persists
    Brent Oil, an international benchmark for the price of crude, fell by approximately 5% yesterday following the weekly US inventory data. The drop in oil is weighing on sentiment elsewhere with the FTSE 100 lower by more than 40 points whilst the pound is fairly mixed and remains near its recent lows.

    Nine consecutive builds for US stockpiles
    The sharp drop seen in the oil price was caused by the DOE data showing a ninth weekly build in a row. The increase of 8.2m barrels was far higher than the consensus expectation, and the prior reading suggests that the supply glut responsible for major declines in the oil price in recent years is far from over. The pact between OPEC and non-OPEC countries to curb production appears to be having a limited impact on reducing supply in a saturated market and with the current agreement set to be reviewed in a few months time, there is plenty to suggest that an extension could be on the cards with the existing measures clearly not providing enough support to prop up the market.

    Oil majors weigh on the FTSE
    Given the dramatic drop in the price of crude oil it is unsurprising that oil stocks are amongst the worst performing on the leading UK stock index. Royal Dutch Shell and BP are both off by around 2% as investors are growing increasingly worried that the rise seen in oil prices over the past 12 months is potentially a false dawn rather than the beginning of a sustained recovery. Commodity stocks in general are lower with BHP Billiton, Anglo American and Glencore all languishing near the foot of the FTSE 100. As far as gainers are concerned, Aviva leads the way with a rise of more than 6% after the insurer unveiled plans to return capital to shareholders having strengthened its balance sheet.

    ECB meeting to dictate the next move
    The main economic event of the day is the ECB rate decision and press conference at 12:45pm and 1:30pm respectively. Expectations for any announcement of an alteration in the current mix of monetary policy are low but nonetheless this has the potential to be a major market mover. Given the recent uptick in Eurozone inflation data there is some expectation that president Draghi will revise higher the central bank’s forecasts in a move that could be deemed as hawkish. Since announcing an extension to the quantitative easing program in December the Euro hasn’t moved a great deal, whilst stock markets on the continent have rallied higher. The extension was viewed in some quarters as a form of tapering given that the monthly asset purchases fell to 60bn euros from 80bn prior, and with an elevated level of shorts in the single currency there is a growing possibility that the market could be more susceptible to a hawkish shock than a dovish one. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #33134
    Jacob Maas
    Jacob Maas
    Keymaster

    DB is toxic

  • #33086

    XTB Market Talk 6th of March 2017
    By XTB Research team

    Financials under pressure as Deutsche Bank slumps
    European shares have begun the week on the back foot with the financial sector weighing on the FTSE 100, which is trading lower by 23 points at the time of writing. The pound is also lower on balance as attention for sterling traders turns to Wednesday’s annual budget.

    Deutsche Bank seek to raise capital
    News over the weekend that Deutsche Bank will reverse course less than two years into CEO John Cryan’s strategy has been met with a negative reaction from investors this morning, as the stock has declined by more than 5%. The overhaul announced measures that include offering 8 billion euros in stock, selling part of the asset management business and reintegrating Postbank in a move that Cryan described as a “brave step of admitting we were going in the wrong direction.” The effect of this can be seen in London with RBS, Lloyds and Barclays all experiencing some selling since the open.

    Miners fall after China GDP target cut
    Elsewhere, Anglo American and Rio Tinto are the two worst performers of the miners this morning as the sector is also contributing to the broader declines seen on the leading UK stock benchmark. The primary reason for the declines are likely due to the Chinese government cutting its growth target to the lowest level in more than two decades. According to state-run news agency Xinhua, the communist party government will aim for annual growth of around 6.5% for the world’s second largest economy in a revision that China’s premier Li Keqiang described as “realistic and in keeping with the economic principle.”

    Merger rumours see fund manager’s stock soar
    Standard Life and Aberdeen Asset Management are expected to announce detailed plans for their £11bn merger today, with the proposed deal expected to create the second-largest fund manager in Europe if it goes through. The markets have reacted positively to the news with Standard Life the best performing stock on the FTSE 100 and higher by just shy of 6% whilst Aberdeen Asset Management has seen its share price rise by approximately 4.5%. The new company would have £660bn in combined assets under management and is expected to lead to cost savings in the region of £200m – largely due to operational and back-office synergies.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32988

    XTB Market Talk 3rd of March 2017
    By XTB Research team

    Records tumble as stock rally continues
    This week has seen further gains for stock markets around the globe with the US leading the charge as all three major indices have posted record highs. In London, the FTSE 100 has also surpassed its previous peak as the rally seen since the US election appears to have found a new lease of life after a period of consolidation. The Dax 30 and Nikkei 225, the leading German and Japanese stock benchmarks respectively, have also joined in the rally and although they remain below their zenith they have both posted 2017 highs since Monday.

    Dudley Trumps US president’s speech
    In FX space there has been a resurgence in the US dollar since Tuesday, with the greenback rising against the majority of its peers. Donald Trump’s speech before Congress in the early hours of Wednesday morning was eagerly anticipated, but from a market-moving perspective had little impact. The rise in the buck is arguably more due to expectations of a rate hike from the Federal Reserve a week on Wednesday, with voting member Dudley sounding uncharacteristically hawkish just hours before the US President began his address. This evening at 6pm, Fed chair Yellen will deliver her final public speech before the lockdown period ahead of the March rate decision and traders will be keenly watching for any further hints as to a further increase in the base rate. One currency appreciating on the week against the US dollar is the Mexican Peso after positive comments from US Secretary of Commerce Wilbur Ross saw the peso soar by more than 2% around Friday lunchtime.

    Rising dollar weighs on commodities
    Several commodities have lost ground this week as the appreciation seen in the greenback has weighed on them in dollar denominated terms. Barring a late rally, Silver is on course for its first weekly loss of the year after trading up to its highest level since the US election night on Tuesday. Gold has followed a similar pattern and both precious metals look potentially vulnerable going forward, especially if the Fed do choose to increase rates. An eighth successive rise in the weekly Department of Energy (DoE) crude oil inventories has seen some modest downside in oil benchmarks with front month Brent futures on course for their lowest weekly close of the year. After rallying strongly at the end of November when the OPEC production cuts were announced the market has been range bound and in a period of consolidation. Despite the early signs showing a high level of compliance amongst OPEC members to their new quotas, the failure for oil prices to break higher may be seen as a cause for concern and with speculative long positioning at historically extreme levels, there is a chance that a sell-off could gather momentum rather quickly should it occur.

    Ping pong for Brexit bill
    The latest developments in the Brexit saga this week have seen the bill for triggering Article 50 sent back to the House of Commons after peers in the House of Lords voted to amend it. The point of contestation is regarding the rights of EU citizens living in the UK and there could now be a scenario developing where the bill bounces between the upper and lower houses in a process known as ping pong. However the chances of this latest twist delaying the start of the formal process of leaving the EU remains low with the 13th and 14th March set aside for MPs to vote down any Lords amendments. With some Peers already having made clear that they are unlikely to fight further if MPs vote down their amendments, the government remains on track to meet its self-imposed deadline to trigger Article 50 by the end of March. Perhaps due to this line of reasoning, the pound experienced a muted reaction to the Lord’s vote but is slightly weaker on balance this week.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32917

    XTB Market Talk 2nd of March 2017
    By XTB Research team

    FTSE treads water after record high
    The FTSE 100 broke into uncharted territory yesterday after a recent ride higher on the coattails of its US and European peers saw the index post both an intraday record peak, as well as an all-time high closing level. The pound continues to drift largely due to a resurgence in the US dollar, with cable this morning trading down to levels not seen in almost 6 weeks.

    Mixed UK construction data
    The main economic release from the UK today has seen the construction PMI come in at 52.5, a slight improvement on the 52.2 seen last time out which was also the consensus forecast. This is the sixth successive print above 50 and on the face of it suggests that the sector is in rude health. However upon closer inspection there are some components of the release which may keep any exuberance in check, as the number of new orders in fact slowed. To be more specific, there was a solid upturn in civil engineering activity for the month of February whilst house building activity expanded at its slowest pace in six months. Overall this leads to no strong conclusions that can be drawn from the data and unsurprisingly this has led to a limited reaction in the markets.

    Global equity rally lifts UK stocks
    Whilst the highly anticipated speech before congress from Donald Trump saw a fairly limited reaction in the markets, a spate of buying in stocks began shortly after with the Nikkei 225 breaking higher in Tokyo. European traders arrived at their desks in Frankfurt, Paris and Madrid in a bullish mood with bourses on the continent beginning to surge higher before the London open. As has been the case lately, the scale of the buying on the leading UK benchmark was relatively smaller than elsewhere, however it was still enough to push the FTSE 100 to an all-time high. With the benchmark flat on the day at the time of writing there’s been a notable move higher in ConvaTec, with the firm seeing its stock rise by more than 5% on the day. BHP Billiton and Rio Tinto are also adding to yesterday’s gains as the mining sector is receiving a dual boost from a decline in the GBP/USD exchange rate and signs of strength in the Chinese economy. It’s not been such a good morning for Capita shareholders though, with the share price falling over 7% after CEO Andy Parker announced his resignation. The company, which is best known for administering TV licensing and the London congestion charge reported that profits had fallen by a third which has led to Mr. Parker’s decision to step down.

    Snapchat IPO on Wall Street
    This afternoon will see shares in the messaging app Snapchat listed on the US stock market for the first time, with the stock expected to be priced at $17. This level is slightly above the $14-16 range that was expected and the flotation values the business at $24bn, despite the firm having never made a profit. Demand for the stock is hot and with the equities in general being in a particularly bullish mood, even by their recent high standards, it is not hard to see why the shares are oversubscribed by more than ten times ahead of the listing. Analogies to other tech IPOs in recent years are obvious with a comparison to Facebook particularly interesting. The listing of Facebook was the largest ever for a tech firm and even though the stock price halved in the first few months of trading it has subsequently rallied around 250%. With this in mind the critics who point to Snapchat posting a $515M loss on revenues of $404m have plenty of ammunition to suggest that Snapchat is overvalued but if it performs even half as well as Facebook they would not want to be caught short in the coming years. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32826

    XTB Market Talk 28th of February 2017
    By XTB Research team

    FTSE flat as markets await Trump
    The FTSE 100 is trading little changed on the day as markets are looking to Donald Trump’s speech to both houses of Congress in the early hours of Wednesday morning for further direction. The pound is fairly mixed too, with the rise in the Swiss Franc and Japanese Yen the only real significant movers against sterling.

    US stocks continue to break records
    The Dow Jones Industrial Average continued higher yesterday with the stock market posting its twelfth successive record closing level – the longest run of all-time high closes since 1987. However, whilst stock markets continue to rally almost unabated – seemingly on the expectation of a major fiscal expansion from the Trump administration – other asset classes are less certain. The yield on US debt and the US dollar, which both rose almost in unison with stocks following Trump’s unexpected victory, have both seen some downside in recent weeks and currently trade some way off their post-election highs. These assets seem more cautious as to the likelihood of a major change in fiscal policy and are adopting a more wait-and-see approach compared to stocks. President Trump’s speech later today has some expectation that he will provide more clarity on the how and when of the proposed stimulus and a failure to satisfy this could see some weakness ahead for stocks. Before that we have US GDP out this afternoon, but this is unlikely to prove a major market mover due to both its lagging nature and the close proximity to Trump’s speech.

    Gold stocks fall ahead of Trump
    The worst performing stocks on the leading UK stock benchmark this morning are Randgold Resources and Fresnillo as Gold futures sold off after the London close on Monday. Before that the price of the precious metal had moved to its highest level since mid-November but the late sell-off coincided with a rise in the buck and could be seen as an example of position squaring ahead of Trump. Whilst Gold and stocks traded with a high inverse correlation for around seven weeks following the US election with the former tumbling and the latter rallying, this year has seen a substantial about turn as both have risen together. The divergence seen in the past two months can obviously continue to widen but judging by the tight nature of the turn with no major fundamental catalyst, and in the absence of any other factor yet usurping US politics in providing the driving force for gold or stocks, the current moves suggest that something may have to give in the not too distant future. This poses a potentially paradoxical question for traders going forward; is Gold correct in “pricing-in” a greater chance of Trump ultimately disappointing with his Fiscal plans? Or are rampant stock market bulls correct in seemingly assuming that this is a foregone conclusion? Tonight’s speech from Trump could well provide the answers. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32782

    XTB Market Talk 27th of February 2017
    By XTB Research team

    Pound falls on Scottish referendum fears
    The pound is trading lower across the board this morning after reports surfaced that the triggering of Article 50 could provide the catalyst for a second Scottish independence referendum. This fall has helped the FTSE 100 make a bright start to the week with the index higher by a little over ten points despite some notable declines amongst its components.

    Sturgeon to call for a second referendum?
    According to senior government sources the Scottish National Party (SNP) leader Nicola Sturgeon will look to take advantage of Theresa May beginning the formal process of Brexit next month by demanding another referendum on Scottish independence. Whilst polls suggest that the majority of Scots would vote in favour of staying in the UK the UK government may consider this too big a risk to take and do maintain the right to refuse another referendum. If Scotland were to choose to leave the UK then the prospect of a devolutionary crisis could rise, which in turn may significantly weaken the UK’s bargaining power when negotiating Brexit terms with the EU. Whilst the pound is lower on this story, the size of the selling remains fairly small and this seems more a case of a story that could grow into something bigger in the coming weeks rather than a major market mover at present.

    Insurers plummet as government cuts discount rate
    Whilst the UK leading stock benchmark is higher in London this morning there has been some substantial drops in the price of certain shares, with Direct Line lower by more than 7% after the government announced a change to a key discount rate. The current discount rate of 2.5% is expected to be reduced to -0.75% in a move that Direct Line have said would cut up to £230m from their annual profits. The discount rate which is based on real yields on index-linked gilts has been at the present level since 2001 and is in essence simply the amount by which insurance companies can discount their liabilities. Whilst many in the industry expected a cut but the consensus had been for a move not below 1%, so this latest development has caught many off guard. Shares in Admiral Group are also lower on the news, although the 3% decline is less than half that at Direct Line as Admiral have estimated the adverse impact to total between £70 and £100m. Consultants PwC have estimated that annual motor premiums would rise by 50-75 pounds on average in light of this news.

    LSE merger on the rocks
    Also under pressure this morning is London Stock Exchange Group with shares in the firm lower by more than 3% after the proposed merger with Deutsche Boerse looks unlikely to now proceed. The controversial £21bn merger which has looked like it would go through for almost a year now has been thrown into chaos due to a dispute with the European Commission over LSE’s majority stake in an Italian bond trading platform. Despite these shares falling the index overall remains higher with Mining giants Anglo American, and BHP Billiton as well as oil majors BP and Royal Dutch Shell all starting the week on the front foot. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32665

    XTB Market Talk 23rd of February 2017
    By XTB Research team

    ​FTSE remains close to record high
    The FTSE 100 is marginally lower on the day as the benchmark remains within striking distance of its all-time high. The pound is also looking to make gains with the currency holding above the 1.24 handle against the US dollar.

    Barclays follows Lloyds lead
    British multinational bank Barclays has followed the lead set by Lloyds yesterday in posting an impressive set of results that have been warmly received by investors. After this earnings season for UK banks got off to a poor start with HSBC’s disappointing results on Tuesday, this morning’s announcement that Barclays almost trebled its profits last year has added more weight to the case for a resurgence in the banking sector and follows Lloyds’s positive release yesterday. Tomorrow sees RBS round off the period and whilst it is expected to report a ninth consecutive annual loss there is some expectation that it will beat the previous figures. Barclays stock has risen by a little less than 4% on the back of the news whilst Lloyds is adding to Wednesday’s gains.

    Intu surges higher whilst easyJet losses altitude
    The best performing stock on the leading UK index this morning is Intu Properties, with the shopping centre owner rising by more than 6% after announcing that underlying earnings had risen to £200m – a 7% rise on last year. RSA Insurance separates Intu Properties and Barclays at the top of the FTSE 100 after the firm reported a strong set of results with the highlight arguably being a 25% increase in operating profits to £655m. At the other end of the index is easyJet, with the budget carrier seeing a sharp decline of more than 5% this morning. A possible reason for this drop is the news that the Andrew Findlay, the Chief Financial Officer, announced that he sold a fairly substantial amount of shares last December.

    Oil threatens to break out on inventory data
    Brent crude, an international benchmark for the oil price, is edging higher today ahead of the weekly Department of Energy (DOE) inventory data release. Despite the previous two readings for this figure showing large builds of 13.8m and 9.5m the price of oil has remained not far from its highest level seen in over a year. Consensus expectations suggest a print in the region of +3-3.5m barrels but last night’s API number, a private equivalent that can be seen as a precursor, showed a surprise decline. The failure to see a sustained push lower in the face of clearly negative supply data could be symbolic of an underlying strength in the market and a drawdown in inventories at 4pm (GMT) could provide the catalyst for a break higher.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32574

    XTB Market Talk 21st of February 2017
    By XTB Research team

    FTSE falls as HSBC disappoints
    The FTSE 100 is trading lower by around 20 points at the time of writing largely due to a sharp drop in the stock of HSBC. The pound is rising against most of its major peers barring the buck with sterling at its highest level in a week against the Euro.

    HSBC drops on earnings miss
    Shares in HSBC are trading lower by more than 6% this morning after the bank reported a significantly below forecast pre-tax profit for Q4 2016. With the bank the first of many major lenders to report this week, there was a sense of optimism that the worst was behind them as far as UK banks were concerned after a prolonged troublesome period since the ‘08 financial crisis. However this morning’s release appears to have stopped any early optimism in its tracks and whilst it doesn’t suggest any substantial weakness – despite missing forecasts by 25% pre-tax profit was still $2.6bn – it does perhaps indicate that a prolonged growth recovery for the beleaguered sector is still some time off. Also reporting this morning was Mediclinic with the international private hospital group seeing its stock drop by almost 5% after announcing lower EBITDA margin for the Middle East.

    FTSE continues to lag European counterparts
    Largely due to the drop seen in HSBC and Mediclinic the FTSE 100 is in the red whilst most of mainland Europe is in the green, with the German Dax closing in on its highest level of 2017. Surveys of purchasing managers showed higher levels of optimism than expected in Germany and the Eurozone with both the manufacturing and services sectors surpassing forecasts. These readings are strong and broadly in the 55 region on the index and, with 50 marking the line between expansion and contraction, suggests a healthy level of optimism on the economy. The biggest riser on the FTSE 100 is Rolls Royce with the manufacturing firm adding to yesterday’s stellar gains on the back of a broker upgrade from Goldman Sachs.

    You don’t need to be a weatherman to know which way the wind blows
    This morning has seen Bank of England Governor Carney and other members of the MPC testifying on inflation and the current economic outlook before Parliament’s Treasury Committee. Whilst the discussions are still on ongoing there have been several interesting comments so far with Mr. Carney remaining fairly steadfast in his dovish stance. The Governor said that there has been “no uptick in market inflation expectations since November” and that despite short run inflation expectations rising, the medium-term are not and this is “consistent with a temporary inflation overshoot.” These are the most relevant comments so far for the markets although there has been a muted reaction as this is broadly in keeping with comments made at the publication of the inflation report at the beginning of the month. On a side note comments from Andy Haldane, the central bank’s Chief Economist, will likely hit the headlines due to their quoteworthy nature. Mr Haldane admitted to making some “terrible” forecasting errors in light of economic projections post-Brexit but then chose to try and justify this by using a bizarre analogy, stating that there is more limited scope to improve economic forecasting than that of the weather. Indeed, it seems that the Bank may be coming to the realisation that they’ve had their own “Michael Fish moment.” ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32490

    XTB Market Talk 20th of February 2017
    By XTB Research team

    FTSE lags as the pound rallies
    The FTSE 100 is trading little changed on the day and lagging behind its European counterparts this morning, largely due to the 7% drop seen in Unilever after news broke over the weekend that a potential takeover deal has fallen through. Meanwhile the pound has begun the week on the front foot with the currency rallying across the board and recouping some of last week’s losses.

    Unilever drop leaves the FTSE trying to ketchup
    The biggest mover on the leading UK stock market is Unilever, with shares in the consumer goods company falling heavily after Kraft Heinz pulled out of a takeover bid. Today’s decline has seen a fair amount of last week’s advances handed back after the stock soared higher on Friday when the bid was announced in what could have been the largest ever acquisition of a UK company. The announcement that Kraft Heinz have pulled out the deal will likely come as a pleasing development for Theresa May, as the UK PM promised to take a more interventionist approach to foreign takeovers during her Tory party leadership bid last summer. With the fall in Sterling since the EU referendum, UK companies have become relatively cheaper and therefore more attractive to international suitors but there have been surprisingly few firms who have looked to use this currency devaluation to their advantage so far.

    Peers unlikely to oppose Brexit bill
    After passing through the lower house of Parliament with relative ease a fortnight ago, the Brexit bill will today be debated in the House of Lords. The government does not have a majority in the Lords and there is a possibility that an alliance of Labour, Liberal Democrats and cross-benchers could throw in a spanner in the works. However the base case expectation remains that there will be no significant delays here and whilst meaningful votes aren’t expected until the 7th of next month, the government seem on track to meet its self-imposed deadline of triggering of Article 50 before the end of March.

    RBS rallies as focus turns to banks earnings
    The best performing stock on the FTSE 100 this morning is the Royal Bank of Scotland (RBS) after the Treasury announced its intentions to change plans for the Bank to sell Williams & Glyn. Shares in RBS have risen by more than 5% on the news with the lender no longer required to sell Williams & Glyn by the end of the year in order to meet requirements from the EU state aid with regards to the £45bn bailout in 2008. HSBC is slightly higher this morning, with the bank set to report in the early hours of Tuesday morning to kick off a run of UK bank earnings this week. Lloyds are seen by many to be a possible star of this reporting season with Wednesday’s announcement expected to show profits to double. Thursday sees Barclays release which is also forecast to show far more profit than the prior year before RBS are expected to report a 9th successive year of losses on Friday. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32465

    XTB Market Talk 17th of February 2017
    By XTB Research team

    FTSE to end the week near record highs
    It’s been another strong week for the leading UK stock market with the FTSE 100 now within striking distance of its all-time high. The pound has come back under some pressure this week with several economic releases weighing on the value of sterling.

    Pound falls back on economic data
    An unexpected 0.3% decline in UK retail sales for January saw the pound hit with a wave of selling just after 9:30 this morning, with the GBPUSD rate briefly dropping below the 1.24 handle to trade down near its lowest level of the week. The release was the third data point of the week that has contributed to overall weakness in the pound, with lower than expected inflation and average earnings figures keeping the currency offered for most of the week.

    Wall Street set for record weekly close
    All three of the major US stock benchmarks have posted all-time highs this week, much to the delight of President Trump who tweeted his joy at the run yesterday. It has been yet another eventful week for the new president who has continued to attack several branches of the media and yesterday gave a press conference that was one of the most bizarre seen in living memory. In terms of macroeconomic drivers from across the Atlantic the residing feeling remains one of strength, with monthly retail sales and initial jobless claims both delivering strong readings. Fed chair Yellen took a hawkish turn in her testimony before a senate committee in Washington on Tuesday and due to this, and a strong pick-up in inflation indicators, the market implied probability for a rate hike at the next Fed meeting in March rose. Despite this the US dollar has failed to show a significant appreciation and is fairly mixed overall on the week. Ten-year yields rose earlier in the week on these developments but they have fallen back once more heading into the weekend, which has provided a boost for Gold and Silver with the latter posting a three-month high.

    Unilever rejects takeover bid
    The rise in stocks across the pond has been followed to some extent in London with the FTSE 100 higher by approximately 15 points on the day largely thanks to a 13% jump in Unilever’s stock. The consumer goods company has seen its share price soar after becoming the subject of a $143bn takeover bid from Kraft Heinz, a food conglomerate backed by Brazil’s 3G and Warren Buffet. Whilst the bid of $50 per share has been subsequently rejected there is some belief that there could be further offers in the not too distant future. Taking the current GBPUSD exchange rate the bid represents a premium of around 6% on the last traded stock price and suggests there could be more upside ahead.

    Banking sector weakness ahead of earnings reports
    There is some notable weakness seen in banking stocks today with Standard Chartered off by almost 4%, whilst Barclays and Lloyds are also firmly in the red. These shares have been in the spotlight recently and with the latest earnings figures set to be released next week there could be some heightened volatility going forward. Miners are also seeing some selling with Anglo American, BHP Billiton and Rio Tinto looking set to end the week on the back foot. Elsewhere it’s been a week to forget for Rolls Royce shareholders after the manufacturing company experienced a sharp decline after posting a record loss on Tuesday and the stock is down by a further 2% today.

    Oil inventories continue to rise
    The weekly crude oil inventory figures from the Department of Energy (DOE) showed another substantial rise on Wednesday with an increase of 9.5m barrels. Whilst this reading is lower than the 13.8m seen last week it is still the second highest since early November and suggests that the supply glut in crude is persisting. Comments from OPEC yesterday that the output deal could be extended saw a brief rally that fizzled out without much follow through, while Brent Oil is approaching the lower bound of its recent range. The crude benchmark has been in a remarkably narrow trading range for the past two months but the failure of the OPEC supply cuts – which this week were shown to have a surprisingly high level of compliance – to cut stockpiles will come as a worrying development for oil bulls.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. ​

  • #32440

    XTB Market Talk 17th of February 2017
    By XTB Research team

    How did UK Retail sales impact Pound?

    The retail sales figure for January unexpectedly fell by 0.3%, marking the second successive monthly contraction. Whilst the reading on its own shows only a marginal decline, it comes on the back of a drop of 1.9% previously and could raise some question marks over the levels of consumer spending in the economy. The reading has done little for the pound, with the currency dropping to its lowest level of the day and falling close to the 1.24 handle against the US dollar.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. ​

  • #32406

    XTB Market Talk 16th of February 2017
    By XTB Research team

    FTSE falters after bright start
    The FTSE 100 has been met with some fairly strong selling this morning after popping to its highest level in almost a month shortly after the open. The index has since shred 30 points, with the rise in the pound threatening to put a halt to the recent run higher.

    Pound gains as US dollar pulls back
    Sterling has moved back above the 1.25 level against the US dollar this morning as the buck has come under some selling pressure following its recent appreciation. The market-implied probability of a rate hike from the Fed has risen in recent days, with a notably more hawkish Yellen and a substantial increase in the latest inflation figures both seeing traders become more open to the idea of another rise in the interest rate at the next policy meeting. Despite this the buck has softened and given a de facto boost to the pound in an unexpected move that has left many searching for an explanation, with profit-taking after recent gains being touted as a possible reason.

    Airline stocks set for take off?
    International Consolidated Airlines, the parent group of British Airways, is the best performing stock on the FTSE 100 this morning with a series of broker upgrades the most plausible explanation for the rise. The stock has now recovered the vast majority of the post-Brexit declines and is looking for a less turbulent time ahead. Airlines around the globe could be set to see a take-off in their stock prices with news yesterday that Warren Buffet had increased his holdings in the four biggest US airlines sevenfold. Shares in easyJet are also gaining altitude on the move in, but in contrast to International Consolidated Airlines the budget carrier remains close to its post-Brexit lows.

    FTSE to follow US counterparts to record highs?
    Despite the early weakness in the leading UK stock benchmark this morning, the FTSE 100 remains within striking distance of all-time highs. The index has enjoyed a rise higher on the back of its US equivalents, with all three major stock markets across the pond posting yet another day of records on Wednesday. A look at the biggest fallers in London this morning appears as if the leading index has been arranged in reverse alphabetical order with AstraZeneca, Anglo American and Antofagasta Holdings the three worst performing stocks. Rolls Royce has posted a fresh weekly low as the manufacturing firm continues to see weakness following the reporting of a record loss earlier in the week. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. ​

  • #32326

    XTB Market Talk 15th of February 2017
    By XTB Research team

    Pound drops on fall in earnings
    Sterling has taken a leg lower this morning after the latest UK employment data showed a smaller than expected rise in average earnings. The drop has boosted the FTSE 100, with the index rising by 30 points on the day.

    Inflation case weakens further
    In recent weeks there has been a growing feeling that rising inflation will shortly begin to impact the Bank of England’s future policy decisions, with some using this line of thought as a reason to suggest an imminent appreciation in the pound. However today’s rise of 2.6% in the average earnings index was both below the consensus forecast for a 2.8% print and the 2.8% seen previously. This is the third event – after the BoE inflation report and CPI data – that has been touted as possibly showing rising inflationary pressures but ultimately failed to do so.

    Claimant count falls the most since 2009
    At the same time as the earnings release the change in the number of people claiming unemployment benefits in January dropped by 42.2k, marking the biggest decline in this economic indicator since May 2009. This is obviously a strong signal of health for the labour market, but the immediate reaction in the pound, which fell across the board in the minutes following the release, suggests that the earnings figure is the bigger market mover.

    Financials lead the surge higher
    The FTSE 100 was already up on the day before the fall in sterling provided a further boon for the benchmark which is continuing its recent upwards trajectory in pursuit of a new all-time high. Several of the best performing stocks on leading UK index come from the financial sector with RBS, Barclays and Standard Chartered all on course for a day of strong gains. Rolls Royce shares are under pressure once more after yesterday’s strong declines, with the stock lower by a little over 1% and testing the 700 level.

    US data to support recovery in the buck?
    Janet Yellen stole the headlines yesterday with some uncharacteristically hawkish rhetoric seeing the US dollar appreciate whilst all three major stock indices across the Atlantic posted record highs. Declaring that delaying the removal of the Fed’s monetary accommodation could lead to rapid rate hikes in the future is about as strong a hint as Chair Yellen could give that the central bank are looking to raise rates soon and the market-implied probability for a hike at the next meeting in March duly jumped up. Whilst this stole the limelight another development yesterday slipped under the radar as the producer price index (PPI) for January surged higher by 0.6% m/m – the highest reading for this inflation indicator since in more than two and a half years. This afternoon sees the more widely viewed consumer price index (CPI) data released at 1:30pm (GMT) and a further beat could apply more upward pressure for the Fed to raise next month.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice. ​

  • #32266

    XTB Market Talk 14th of February 2017
    By XTB Research team

    UK inflation rises by less than forecast
    This morning saw the release of the latest inflation data from the UK, with the consumer price index (CPI) rising to its highest level in more than two years. Despite this the pound has fallen lower across the board since the release whilst the FTSE 100 has attempted to rally once more.

    CPI unlikely to alter BoE decision making
    Whilst today’s CPI print of +1.8% Y/Y marked the highest reading since the summer of 2014, it still represents a miss on the consensus estimate of a +1.9% release. Whilst a 10 basis point change on a year on year basis seems almost inconsequential it has caused a reaction in the markets with the pound seeing some fairly strong selling on the back of the data point. This is perhaps due to the rise still coming in below the BoE’s target of 2% and failing to probe the claimed limits of tolerance that Governor Carney has for above target inflation.

    Record loss sees Rolls Royce shares slump
    The stock of manufacturing company Rolls-Royce has sold off hard this morning after the firm reported a record loss of £4.6bn. The share price has fallen by more than 5% on the news and wiped more than half a billion off the value of the company. Elsewhere there is plenty of green on show however, with TUI AG leading the gainers with a rise in excess of 5% after the travel and tourism firm gave an upbeat forecast of the 2017 holiday market. Mining stocks are remaining firmly bid with Antofagasta, Fresnillo and BHP Billiton looking to add to their impressive recent run.

    Yellen speech to dominate the afternoon’s trade
    Fed chair Janet Yellen is due to testify before the Senate Banking Committee in Washington DC at 3pm (GMT) in what is sure to be a widely-watched speech. The last meeting of the US central bank saw monetary policy kept on hold, with little alteration made on the previous statement. With forward guidance implying that the rate-setting body believe there will be three rate hikes this year, the market is once more predicting a more dovish path. With an approximately 35% chance currently being given for a March hike, today’s speech could provide an opportunity for Ms. Yellen to show that she is serious in making significant progress in the normalisation of monetary policy before her term expires next year. A failure to do so could see more pressure come on the US dollar going forward, with the hugely popular call before the turn of the year for a further appreciation in the buck in 2017 starting to look in need of a more hawkish Fed.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32172

    XTB Market Talk 13th of February 2017
    By XTB Research team

    FTSE remains near highest level in a month
    The FTSE 100 remains well supported at the start of the week with the index higher by 5 points following a strong open. The pound is also rising, showing modest gains against its major peers.

    Miners begin the week on the front foot
    The best-performing stocks on the leading UK index this morning come from the mining sector with Glencore leading the charge in rising more than 2% on the day so far. Anglo American, BHP Billiton and Rio Tinto are all enjoying positive trade as the sector as a whole looks to add to recent gains. Worldpay is suffering with a case of the Monday blues, with the payment processing company languishing at the bottom of the FTSE 100 and adding to last week’s declines.

    Economic data to drive the pound
    With the Brexit bill awaiting the House of Lords to return on the 20th February following their recess, the pound is likely to be driven more by data on the UK economy than political developments this week. There are several scheduled releases that could prove important over the coming days, but given the recent focus on inflation, Tuesday’s CPI figures could well prove to be the most pertinent.

    Higher inflation to increase rate hike pressure
    The Bank of England (BoE) refrained from making any significant hawkish alteration to its stance following the recent meeting of the Monetary Policy Committee (MPC) which included the quarterly inflation report, but a strong reading tomorrow would ramp up the pressure to do so. A survey of economists by Bloomberg show that 87% believe that the next move in UK rates will be an increase, up from 65% last month. This is a remarkably high figure given the likely imminent triggering of Article 50 and with the ensuing uncertainty this will cause it seems unlikely that the BoE would look to tighten policy anytime soon, even if it moves above the 2% threshold.

    CPI to test MPC’s limited tolerance?
    Accusations that the rate-setting body were too aggressive in easing following the referendum have been met with fairly strong rebuttals and despite protestations that there is a limited tolerance for above target inflation, the consensus expectation for future rates appears to be unrealistically high. Furthermore, despite MPC voting member Kristin Forbes adopting a hawkish rhetoric during her speech last week, her comments lost some weight when it was announced shortly afterwards that she would be stepping down from the role in the summer. Consensus estimates for the CPI Y/Y are for a rise of 1.9% which would still be below the central bank’s threshold and it would likely take a substantially higher reading to cause a sustained rally in the pound. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32113

    XTB Market Talk 10th of February 2017
    By XTB Research team

    FTSE set to post solid weekly gains
    Barring a dramatic late reversal, the FTSE 100 is set to end the week firmly higher as the index seemingly continues to follow the path of least resistance in trending upwards. The inverse correlation with the GBP, which has been evident for many months now may be subsiding somewhat with the value of sterling also up on the week.

    Markets look through economic release
    The only real UK economic data of note this week has shown better than expected strength in the manufacturing and construction industries. UK manufacturing production month-on-month rose by 2.1% for the month of December – the highest reading since the EU referendum. In addition, construction output unexpectedly grew by 1.8%, whilst the industrial production figure supported last month’s robust reading in rising by 1.1%. The releases have had little impact on the FTSE 100 or the pound, with the latter in fact falling lower in the hours that followed after an initial pop up. This could be a case of profit taking going into the weekend, with the pound showing gains against all its major peers barring the US dollar for the week.

    GBP-FTSE correlation weakens
    Ever since traders cottoned onto the fact that a falling pound boosts earnings denominated in foreign currencies, the FTSE 100 and pound sterling have strongly diverged with the former rallying and the latter sinking. Despite this they’ve both risen this week as the relationship seems to have weakened somewhat. In times of turmoil, or when there is one single factor predominantly driving markets, correlations typically rise (think US assets post-election) and this was illustrated brilliantly in the FTSE-GBP correlation. Whilst it is far too early to call one week’s positively correlated moves an end to the long standing relationship, it does perhaps reveal that markets are starting to trade more independently and focus on something other than the Brexit.

    External factors usurp Brexit developments
    The pound has risen the most against the New Zealand dollar out of all G10 currency pairs this week, largely due to the Kiwi tumbling after the Reserve Bank of New Zealand (RBNZ) rate decision. The base rate was kept on hold at 1.75% but some dovish rhetoric from Governor Wheeler in which he stated that the currency “remains higher than sustainable” and that the “policy may need to adjust” caused a depreciation. As for the FTSE 100, news from outside these shores has been the single largest determinant this week with Donald Trump’s promises of doing something “phenomenal” on tax reform within the next 2-3 weeks adding more fuel to the global stock market rally which boosted shares not only on Wall Street, but also from Tokyo to London. This is not to say that the latest twists and turns in the Brexit bill are irrelevant, but it now seems ever more likely to pass through parliament without a hitch and allow Theresa May to invoke Article 50 by the end of March. Whilst this progress will likely bring forward the inevitable uncertainty that will occur during the 2 year window for negotiations on the terms of the separation of the UK and EU that will begin once Article 50 is invoked, this seems to have been meet with a mildly positive response in the markets, albeit one that is not strong enough to be the dominant force on flows. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32053

    XTB Market Talk 9th of February 2017
    By XTB Research team

    Morning analysis

    Sterling strengthens as Brexit bill progresses
    The pound is rising across the board today after MPs yesterday voted overwhelmingly in favour of passing the Brext bill unamended. The FTSE 100 has had a quiet morning so far, with the index higher by 7 points at the time of writing.

    MPs reject amendments to the bill
    The Brexit bill has passed through the lower house of UK parliament and will now move on to the House of Lords after MPs rejected any amendments on Wednesday evening. The bill which will give the government the authority to trigger Article 50 was approved by 494 votes to 122 in the Commons and it is unlikely the Lords will stand in it’s way. A government source has warned that should the House of Lords oppose the bill, there will be an overwhelming public call for its abolishment but it seems improbable that this will occur. Theresa May’s aim to invoke Article 50 by the end of March now seems likely to be met with the upper house to begin debating the bill when they return from their recess on the 20th February.

    Pound more sensitive to good news than bad
    The positive reaction in the pound may seem counter-intuitive on the back of this latest development, as the bill passing through the Commons has paved the way for the formal beginning of the Brexit process which even the most ardent Brexiteer would admit will be a period of heightened uncertainty. Perhaps traders are seeing through this and believe that the sooner the UK starts the two-year window, which upon its closing will mark the exit from the EU, the closer we are to knowing what terms we will leave on. Downside risks clearly remain for the pound but in the short term the currency has reacted positively, with several developments in the past month indicating Article 50 will be triggered sooner rather than later being met with an appreciation in sterling. This suggests that, in the near-term at least, the pound is more sensitive to positive news and looking through the negatives.

    Financials and Pharma stocks rise
    Shares in insurance companies Legal & General, Aviva and Prudential have all gained this morning as the sector has enjoyed a bright start. Barclays and Standard life are also showing notable gains as the move has seen the majority of financial stocks joining in. A solid set of earnings has contributed to the rise in GlaxoSmithKline which is one of the best performers on the FTSE 100 this morning and the move higher has boosted AstaZeneca also. After an impressive run of late Anglo American is seeing a second successive day of selling. Whilst this could be simply attributed to a pullback due to some profit taking, any further declines may worry investors and see more heading for the exit door after the stock has risen by more than 15% in the past month.

    Evening analysis

    Trump trade poised to resume?
    The main event of today’s trading session was some comments from US President Trump that sent the US dollar soaring higher alongside stock markets around the globe, whilst precious metals took a turn lower. The moves are in keeping with those seen following the US election last year, as the markets anticipated the actions of the incoming president.These trends have been correcting for much of 2017, with market participants citing a lack of any tangible changes to the levels of regulation and no signs of any imminent tax reform alongside his unpredictable and “unpresidential” demeanor as likely reasons for the retracements.

    “Phenomenal” tax reforms to be announced in the coming weeks
    Today’s comments from Mr. Trump related to tax reform, with the US president stating that there would be “something phenomenal” announced over the next two or three weeks. Perhaps the comment was enough to reassure traders that Trump will follow through on his promise although to be fair he has been fairly unwavering on his stance on the matter. Alternatively it may simply be a case of the correction in the greenback reaching a natural level to resume its march higher, but either way today’s developments have the feel of a turning point for several markets. Due to the unpredictability of not only Mr. Trump but markets themselves, this could prove to be a false dawn, however another run higher in the buck and US yields now looks far more likely than it has for several week.

    More record fall for US stocks
    Whilst there has been a significant pullback in many of the asset classes that moved strongly following Trump’s election win, US stock markets have remained firmly supported and in the vicinity of record highs. Today’s news saw the US500 (+0.62%) break above the 2300 level for the first time as S&P futures joined the Dow Jones (US30 +0.64%) and Nasdaq (US100 +0.49%) in posting all-time highs this week. The German Dax (DE30 +0.70%) has shrugged off some early weakness in the week to trade little changed whilst the FTSE (UK100 +0.59%) has also joined in the broad move higher.
    *Please note all stock indices quoted are futures and not the cash values and taken from the xStation5 platform

    USDJPY back above 113
    The USDJPY (+1.14%) has been one of the biggest beneficiaries of these comments and the pair has surged higher on the back of them. The broad based US dollar strength is evident in numerous pairs with the NZDUSD (-0.79%) declining further following last night’s RBNZ inspired sell-off and the USDCHF (+0.61%) rallying back above parity. One of the few currencies standing up to the advance in the US dollar is the pound, with the GBPUSD (-0.07%) little changed on the day and holding firm above the 1.25 handle on the European close.

    Precious metals to lose their shine?
    Gold (-0.47%) and SIlver (-0.37%) have both experienced some fairly sharp selling this afternoon after both were seemingly set to continue their recent march higher before Trump intervened. A rise in US yields, as shown by the falling Tnote (-0.33%) has weighed on both of these whilst proving supportive of the US dollar. Platinum (+0.43%) rallied strongly early on and despite some selling following the Trump comments the market is still on course for its highest close since the start of October.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #32001

    XTB Market Talk 8th of February 2017
    By XTB Research team

    FTSE and GBP await the next move
    Both the FTSE 100 and pound are little changed on the day after yesterday’s trade saw notable reversals late in the session. The pound was under pressure yesterday morning and supportive of the early surge in the FTSE 100 before these initial moves reversed into the European close.

    BoE speeches in focus
    Yesterday’s reversal in the pound came after some hawkish comments from Bank of England (BoE) member Kirstin Forbes, with the rise in the currency weighing on stocks. A transcript of a speech that Forbes was set to deliver in Leeds stated that she believes an interest rate rise could soon be warranted. Whilst she is one of the more hawkish members on the rate-setting panel, the comments were seized upon by pound traders which saw the currency recover from being 100 pips down against the US dollar around Midday to end up higher by 50 pips. This afternoon’s speech in Birmingham from BoE Deputy Governor Jon Cunliffe may now take on a greater importance as traders search for more clues as to the future path of monetary policy.

    European political risk continues to rise
    The spread between Italian and French government bond yields compared to their German counterparts hit multi-year highs this morning as the growing political uncertainty threatens to shake up the Eurozone. Last summer’s Brexit vote has remained as the biggest driving force on UK sensitive assets for the past 8 months, but the growing threat of anti-establishment politicians succeeding in upcoming elections on the continent could have a major impact on these shores. As the US presidential election highlighted, the UK is inextricably linked to foreign developments and despite the vote to leave the EU last summer, UK markets remain vulnerable to external forces. With the French Presidential first round elections still over two months away the recent developments surrounding Francois Fillon are likely to only serve as a precursor for what is to come, with news yesterday that he was continuing his bid despite the scandal surrounding his wife’s pay contributing to the surge in yields on French debt.

    Broker upgrade sees Rolls-Royce rise
    A repeat of the “buy” recommendation from Citigroup on Rolls-Royce shares has seen the manufacturing firm’s stock rise by almost 3% today and currently lead a list of the biggest gainers on the FTSE 100. Taylor Wimpey and Barratt Developments are also both higher with the housebuilders adding to Tuesday’s gains. A drop in the oil price has seen Royal Dutch Shell decline by approximately 2% since last night’s close, with this afternoon’s Department of Energy inventory data from the US threatening to show yet another large build and suggest that the OPEC and non-OPEC output cuts are having limited impact when it comes to reducing the supply glut. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31949

    XTB Market Talk 7th of February 2017
    By XTB Research team

    Pound slips on political pressure
    The pound has declined below the 1.24 level against the US dollar this morning as political developments continue to impart downward pressure on the currency. The FTSE 100 has benefitted from this and risen by more than 35 points since the open to trade at its highest level in over a fortnight.

    UK house prices fall
    The latest Halifax house price index has shown a 0.9% month on month decline, coming in well below both the consensus forecast and prior readings. The figure represents the second worst since the EU referendum last summer and may serve as a warning sign as to the health of the housing market. It should be pointed out that this data point seems contrary to the prevailing trend and one bad reading doesn’t necessarily mean house prices are set to fall, but with recent surveys of business leaders showing the majority believe that Brexit has already had an adverse impact, and this coming before the process of leaving the EU has even begun, today’s data could be seen as a potentially early warning sign of what is to come.

    False dawn post-Brexit?
    Following the sharp rally in sterling after Theresa May’s Brexit-objectives speech and the continued solid economic data from the UK, you may have been forgiven for thinking that the worst was behind us with regards to the UK leaving the EU. However recent developments have served to dispel this notion as several signs are suggesting that under the surface the problems are growing. Yesterday saw the majority of business leaders surveyed express their belief that the historic vote had already adversely impact their company and this morning’s sharp drop in the Halifax house price index – the second steepest since last June’s referendum – serves as a further warning sign. With the government seemingly on course for triggering Article 50 by the end of March, this week’s releases indicate that the uncertainty going forward is already weighing on sentiment and this is likely to only increase in the coming months.

    Broad move high for UK stocks
    One aspect of this morning’s rally in the FTSE 100 is the breadth that is seen with the vast majority of shares joining this latest leg higher. Taylor WImpey and Barratt Developments have both recovered Monday’s losses despite the soft house price data whilst Fresnillo and Randgold Resources continue to rise on the back of the sustained price increase seen in Gold. Only half a dozen companies aren’t in the green at the time of writing, with BP a notable faller after posting results prior to the open. The oil major reported a profit of $115m after a loss of $6.5bn in 2015 but despite this the stock has seen some softness, perhaps due to the reduction in capital expenditure which may suggest that the firm isn’t overly optimistic going forward – despite the rise in crude over the past 12 months.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31939

    XTB Market commentary on House Price Index – 7th of February 2017
    By XTB Research team

    The latest Halifax house price index has shown a 0.9% month on month decline, coming in well below both the consensus forecast and prior readings. The figure represents the second worst since the EU referendum last summer and may serve as a warning sign as to the health of the housing market. Despite the Bank of England refraining from assuming a more hawkish stance in the face of rising inflation at their last policy meeting, it seems to have offered little support to house prices given the latest decline. It should be pointed out that this data point seems contrary to the prevailing trend and one bad reading doesn’t necessarily mean house prices are set to fall, but with recent surveys of business leaders showing the majority believe that Brexit has already had an adverse impact, and this coming before the process of leaving the EU has even begun, today’s data could be seen as a potentially early warning sign of what is to come.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31912

    XTB Market Talk 6th of February 2017
    By XTB Research team

    UK business already feeling Brexit effect
    A survey of senior executives from the largest companies in the UK have found that more than half felt that last year’s EU referendum was already having a negative effect on their business. This is surprising in some ways as the post-vote economic data has been largely positive causing some Brexiteers to claim that there have been no adverse effects since the historic vote last June. The pound has begun the week in a quiet fashion and sits little changed on the day whilst the FTSE 100 has edged up by 12 points to trade above last week’s highs.

    Brexit Bill to drive the pound
    The week ahead is quiet on the economic data front for sterling, with Friday’s manufacturing production the only scheduled release of note, with the currency likely to be more sensitive to the latest developments in the Brexit saga. The Brexit Bill will go through the Committee stage in the house of Commons in the coming days, during which opposition politicians can put forward proposed amendments to be voted upon. Despite Jeremy Corbyn, the leader of the opposition, telling Labour MPs to cancel leave and prepare for a three-line whip there is a threat that the cross-party effort by MPs to avert the risk of the UK leaving the EU without a deal could fall on deaf ears. The Ipsos Mori survey of senior executives covered more than 100 of the largest 500 companies and found that 58% felt the Brexit vote was already weighing on business, and perhaps more worrying only 11% believed there had been a positive impact.

    Gold stocks rise on Trump
    The best performing stock on the FTSE 100 this morning is Randgold Resources which is higher by more than 3% and has moved back above the 7100 level. The rise has been caused by more upside seen in the price of Gold, with the precious metal higher once more this morning after ending Friday at its highest weekly close since early November. US president Donald Trump, whose surprise election win was the main catalyst for the sell-off seen at the end of last year, has now come to the support of Gold bugs with his erratic and unprecedented behavior since moving into the White House. Whilst his actions have been largely in keeping with what he campaigned on, the markets seem to have been surprisingly caught off-guard with this. The large scale fiscal expansion which boosted US debt yields and the dollar whilst contributing to Gold’s decline in the wake of Mr. Trump’s victory has yet to materialise and what many believed was a one way bet is now seeing a large pullback. Elsewhere banking stocks Barclays and Lloyds are higher by 1.6% and 0.8% respectively whilst Dixons Carphone sits at the foot of the index and lower by 3% at the time of writing. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31793

    XTB Market Talk 3rd of February 2017
    By XTB Research team

    Services data to offer the pound a reprieve?
    This morning sees the results of the third and final industry survey released, with the UK services PMI due out at 9:30am GMT. Going into the economic release the pound is little changed on the day after yesterday’s sizeable declines, whilst the FTSE 100 is higher by 12 points.

    Economic data to drive markets into the weekend
    There are two major economic releases today from either side of the Atlantic which could dictate the market’s direction into the weekend. First up, we have the UK services PMI which is expected to show another strong reading after a print of 56.2 seen previously – this was the highest reading since August 2015. Consensus estimates believe there will be a slight drop to 55.8 but this would still mark a solid data point and show strength in the UK’s largest industry sector. The readings in the last two days for manufacturing and construction have shown contrasting pictures with the former surpassing expectations whilst the latter disappointed. However the services equivalent carries more weight and after yesterday’s softening in the pound a strong figure could come to its aid. Having said that, expectations are lofty and if we get a disappointment we could see the pound come under pressure into the end of the week.

    First US employment report under Trump
    This afternoon sees the US non-farm employment report released at 1:30pm GMT in what is commonly one of the biggest market moving events of the month. Expectations are for around 170k jobs to have been added in January after a reading of 156k previously. Despite this data release historically being volatile and often including large revisions to prior prints, the last five have been remarkably consistent and in the 150k-180k range. Another figure in this region would support the idea that the US jobs market remains robust but there are some suggestions we could be in store for a stronger print. Wednesday’s ADP release – a private equivalent of the government’s data that is released today – is often seen as a precursor to the NFP and this smashed expectations of 165k jobs to have been added, coming in at 246k. In addition the ISM manufacturing release this week showed a significant beat on the employment subindex so there is plenty to suggest we could be in for a strong reading later. US President Donald Trump remains a potentially key driving force on the markets with just a single tweet having the ability to wipe millions of dollars off certain stocks. Although Mr. Trump hasn’t let a lack of knowledge or understanding stop him from offering an opinion on several topics, since taking office he has refrained from commenting on economic data. If today’s data is strong, as some suggest it may be, then will Mr. Trump attempt to step forward and take the credit or will he refrain from comment? The president receives the jobs data prior to the official release and there is the possibility that he will be unable to refrain himself from firing out his customary early morning tweet, particularly if the figures are impressive. Previously this is unheard of and the idea of a president releasing economic data early would be dismissed as highly unlikely, but with Mr. Trump you just never know. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31765

    XTB Market Talk 2nd of February 2017
    By XTB Research team

    “Super Thursday” for the GBP and FTSE
    Today’s Bank of England rate decision coincides with the release of the inflation report, with the quarterly event traditionally being dubbed “Super Thursday”. Due to Brexit secretary David Davis also presenting MPs with a formal policy paper setting out the strategy behind the government’s Brexit strategy around the same time, today could be even more super, with the potential for extremely volatile in the pound. The currency is trading a little softer so far this morning falling against all its major peers barring the US dollar, which is depreciating across the board following the FOMC last night.

    MPs overwhelmingly back Article 50 bill; white paper imminent
    Last night saw the government’s European Union Bill pass through the House of Commons with a majority of 384. The bill, supported by the Labour leadership, allows Prime Minister Theresa May to get Brexit negotiations underway, with a white paper set to be published around Midday. It will be interesting to see whether the paper goes into much more detail than Mrs. May’s speech last month which outlined her main objectives when negotiating the UK’s separation from the 27 EU member states.

    UK construction sector slowing down?
    The second of three surveys amongst purchasing managers in key industries this week was released this morning and showed an unexpected fall in the pace of expansion for the construction sector in January. Whilst a reading of 52.2 still represents growth it is significantly lower than the 54.2 seen last time out and has seen the pound experience some small scale selling in the immediate reaction. The GBPUSD had broken higher to trade at levels not seen since mid-December early on, but this economic release saw the pair turn lower after briefly popping above the 1.27 level.

    FTSE seeks traction after recent declines
    The leading UK stock market is higher by 10 points on the day after falling to its lowest level of the year shortly after the open. The price of Gold bullion has broken up to trade at its highest level in over 11 weeks and this has given Randgold Resources and Fresnillo a boost, with the stocks higher by 3.40% and 1.65% respectively. The drop in the US dollar following a fairly neutral FOMC statement last night has also boosted mining stocks with Anglo American and Glencore both firmly in the green, whilst a positive reaction seen in oil benchmarks to a large build in US inventories has contributed to the rally seen in Royal Dutch Shell which is up by almost 2% at the time of writing. Worldpay currently sits at the foot of the index and is lower by more than 4.5% on the day after news has broken that private equity investors have sold their entire stake worth over £600 million in the payment processing company. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31661

    XTB Market Talk 1st of February 2017
    By XTB Research team

    FTSE and Pound rise in tandem
    The FTSE 100 has risen by 63 points this morning and in doing so the market has recovered the losses seen so far this week. The pound is also higher and has moved back above the 1.26 handle against the US dollar this morning shortly after a strong reading in the first data point for industry surveys since the turn of the year.

    Manufacturing PMI matches lofty expectations
    The latest UK manufacturing data has come in broadly inline with expectations and despite showing a drop on the prior reading, this morning’s figure still indicates a healthy pace of expansion in the sector. The PMI print of 55.9 for the month of January is higher than any seen last year barring the December data and remains firmly above the expansion/contraction line of 50. This reading provides further evidence of a robust economy and suggests that despite the self-imposed government deadline for triggering Article 50 becoming ever closer, confidence in the manufacturing industry remains high.

    Higher inflation poses headache for BoE
    However the reading does show a record increase in input costs, which suggests that UK inflation is set to rise further. The quarterly inflation report and comments from the MPC following the policy meeting will be released tomorrow and they now take on a greater significance as traders look to any signs that the rate-setting body will shift to a more hawkish stance in the face of the recent rise in inflationary pressures. The BoE meeting is widely expected to see no change in monetary policy but any allusions to tightening in the foreseeable future from Governor Carney may lead to more upside in the pound. Having said that, this approach could be deemed as rash given the rocky road ahead and it is more likely that Mr. Carney will adopt a soft stance and reiterate the potential threats to the economy going forward.

    BT attempts to pare losses
    With a strong rise in the leading UK stock market this morning, the breadth of the rally will reassure bulls as less than ten stocks are currently not joining in the move higher. BT is rising by around 2.5% as the telecommunications company seeks to recover some of the substantial recent losses seen due to accounting irregularities in the Italian unit of its business. Pharmaceutical firms are amongst the best performers on the day with Hikma Pharmaceuticals, AstraZenca and GlaxoSmithKline all rising. The rise is likely due to comments from US President Trump who yesterday said that his administration will significantly cut the length of time it takes to win regulatory approval for new medicines. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31599

    XTB Market Talk 31st of January 2017
    By XTB Research team

    Pound ends the month on the back foot
    Sterling is under pressure today with the currency falling across the board in a timely reminder that despite the positive rhetoric surrounding the impending triggering of Article 50, the pound remains susceptible to further declines. The FTSE 100 is higher by more than 40 points this morning as the stock market attempts to recoup some of Monday’s substantial declines.

    Downside risks remain for GBP
    A quick glance at the performance of the pound in January shows monthly declines against all its major peers – barring the US dollar – and remains in a vulnerable position. The major political developments this month have been met with a positive reaction in the pound with Theresa May’s speech, during which she laid out her objectives for negotiations on the terms of the Brexit, seeing the largest intraday rally in almost a decade. However this has failed to see a sustained recovery in the value of sterling and the balance of risks for the market going forward remain very much skewed to the downside. The UK government is pushing to meet its self-imposed deadline of the end of March to trigger Article 50 and, despite the recent setback with the Supreme Court rejecting its appeal against the requirement of parliamentary approval for beginning the two year negotiating window, it seems likely this will be met. With the economy chugging along nicely since the vote last summer and showing little by the way of ill-effects there remains the possibility that any Brexit-induced slowdown has been postponed rather than avoided. Could the impending triggering of Article 50 be the catalyst for the economy to wake up to the risks involved in leaving the European Union and cause the pound to retest historic lows?

    One down, two to go
    This week’s economic calendar is a busy one, with the Bank of Japan (BoJ) last night concluding the first of three major central bank meetings. Expectations for any material change in monetary policy are low and the news out of Tokyo overnight failed to see much by the way of a market reaction. The BoJ raised its economic growth forecasts, but kept its policy stance unchanged with the baton now being passed across the pacific to the FOMC, which begins its own two-day meeting later today. Last time out the US rate-setting body increased the target range by 25 basis points, but expectations for another move are low heading into tomorrow’s announcement. Implied probabilities from derivatives markets suggest there is just a 13.5% chance that we get another hike, and therefore the focus may be more on the monetary policy statement for any suggestions of a move in the next meeting in March. Thursday sees the Bank of England (BoE) announce its latest policy mix and whilst there is also little expectation for an alteration, comments from Governor Carney will be keenly scrutinised in light of the recent pick-up in inflation. Some forecasts expect Mr. Carney to adopt a less dovish stance due to the rise in prices, but this appears unlikely given the imminent threat of an adverse economic reaction to the triggering of Article 50 and the Canadian’s limited tolerance to above target inflation may be extended.

    Miners lead the attempted recovery
    A list of the biggest gainers on the FTSE 100 this morning is dominated by mining stocks with Anotfagasta Holdings, BHP Billiton and Anglo American all currently rising by more than 2%. Financials are also joining in the move higher with Old Mutual and Standard Chartered rounding off the top 5. The strong rise in Tesco last week has fizzled out somewhat and after yesterday’s drop, today’s 1.2% decline has seen the majority of the gains erased. The index as a whole has hit an all-time high this month but is on course to end January in the red for the year. The reversal in recent weeks has come in part due to the aforementioned rally in the pound, but also a souring of global sentiment as US president Donald Trump is proving to be even more erratic and unpredictable than many feared. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31540

    XTB Market Talk 30th of January 2017
    By XTB Research team

    Stocks begin the week on the back foot
    Stock markets have started out in a defensive mode this morning with the FTSE 100 falling more than 60 points. Donald Trump is in the headlines once more as his latest executive order signed late on Friday has caused a furore around the globe. However it is unlikely that the weakness seen in the markets is a direct result of this, with a more plausible explanation being some profit taking after strong recent rises.

    UK public backlash against Trump
    A petition calling on the UK government to cancel Donald Trump’s planned state visit has reached 1 million signatures in a development that could well leave PM Theresa May stuck between a rock and a hard place. The most controversial executive order of the new US president’s first week in office suspends entry of all refugees for 120 days, and blocks entry to the US for up to three months for citizens of seven Muslim-majority countries, causing widespread outrage. The timing of the order – shortly after a meeting with Mrs. May – and the subsequent global outrage poses a potentially major headache for the UK PM as she looks to secure a trade deal with the world’s largest economy. With negotiations centralising on the fact that the UK can act outside the EU imminently, a positive agreement with the US would be significant bargaining chip but Mr. Trump’s conduct threatens to damage the PM’s popularity both at home and abroad. Downing Street has already stressed its position had not changed on the US President’s trip but with the rising levels of opposition Theresa May could soon be placed in a difficult position where she needs to make a call that will leave people unhappy whatever her decision.

    FTSE slides in early trade
    Banking stocks are falling this morning and are one of the biggest contributors to the broader decline in the UK’s leading stock index. Barclays and RBS are amongst the biggest fallers and whilst Lloyds is a relative outperformer, it still remains lower by around 1% at the time of writing. Lloyds may be holding up slightly better after the Government has stated that more than 90% of the £20.3bn used to bailout the bank has now been recouped. The announcement was made as the UK Financial Investments said it has sold a further 1% stake in Lloyds, which reduces the taxpayer’s holding to less than 5%. With the majority of stocks on the FTSE 100 in the red, Vodafone stands out as a green shoot with the telecommunications company higher by almost 3% after it announced merger talks were under way with its Indian unit.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31414

    XTB Market Talk 27th of January 2017
    By XTB Research team

    May and Trump meet to discuss trade
    UK PM Theresa May and US President Donald Trump will meet today to discuss the details of a future UK-US trade deal. Both leaders are close to potentially defining junctures in their respective tenures, with Mrs. May running out of time to meet her self-imposed deadline to begin the formal separation from Europe. Meanwhile, Mr. Trump looks to secure a positive outcome from his first meeting with a foreign leader since assuming office, with the level of success of the discussions possibly setting a benchmark for future diplomacy.

    Opposites attract?
    It is not hard to spot the many differences between Mrs. May and Donald Trump, but there are also more similarities than you may at first think. Both rose to power on the back of an unexpected victory that was largely driven by a rising level of populism on both sides of the Atlantic. Due in part to this, both have turned inwards in their objectives now that they’re in office – with several previously held trade deals either broken or in the process of termination, and in a world where both leaders are fast losing allies there is a greater pressure than before in ensuring the close ties between the UK and US remain strong.

    Both parties keen to avoid a Mexican standoff
    Due to the relative size of their economies it appears that there will be a greater degree of willingness on Theresa May’s part to come to some sort of agreement, with a trade deal with the US seen as valuable bargaining chip that can be used when discussing future deals with other nations. However the meeting also provides an opportunity for Mr. Trump to improve his country’s international relations, which have got off to a poor start with the constant aggressive rhetoric surrounding the building of a wall on the southern border causing a Mexican stand-off. It seems likely that both will want to have a positive meeting that they can then use as evidence of success to improve their current standings.

    FTSE set to end quiet week little changed
    Despite the Supreme Court ruling and sizeable moves in the pound it has been a quiet week for the leading UK stock market with the FTSE 100 trading at similar levels to those seen on Monday’s open. After last week’s substantial decline the index has consolidated and whilst we’ve seen a lower low and lower high, the bears have failed to seize the opportunity and really push home their advantage. The benchmark is lower by 3 points on the day but remains above 7150 and is still within striking distance of all-time highs.

    Every little helps for Tesco
    Shares in the UK’s largest supermarket Tesco have soared this morning off the back of the news that a deal has been reached to merge with wholesaler Booker. The stock is up by 8% since last night’s close as the agreement will likely further consolidate Tesco’s position as a market leader. FTSE 250-listed Booker claims to be the UK’s largest cash and carry operator and the firm has also seen a positive reaction in its stock price which has jumped by approximately 15% on the news. Two airline stocks are taking different routes this morning with International Consolidated Airlines higher by almost 2% following analyst upgrades from numerous investment banks, whilst easyJet continues to see turbulence in its share price (-2%) as the budget carrier sees its stock lose altitude at the end of a poor week that saw disappointing results released. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31376

    ​XTB Market Talk 26th of January 2017
    By XTB Research team

    UK GDP grows faster than forecast
    This morning saw the release of data which shows that the UK economy grew faster than expected in the final quarter of 2016. The pound is higher on the day but has seen some weakness since the release, perhaps due to some traders seeing this as a good opportunity to book some profits after a strong run higher in the past couple of weeks. Whilst the FTSE 100 is higher on the day by around 15 points, the index is lagging behind its counterparts around the globe with benchmarks in New York, Tokyo and Frankfurt all surging higher in the past 24 hours.

    UK economy remains vulnerable despite good data
    The preliminary reading of UK GDP for the final 3 months of 2016 has shown a larger than expected rise. An increase of 0.6% Q/Q is marginally higher than consensus forecasts and the prior reading was also revised upwards by 10 basis points. The release provides yet more evidence that the UK economy is running along nicely and barring a blip following the EU referendum, there is little to suggest any weakness. However the dark cloud of uncertainty that was created last June continues to hover threateningly overhead and despite the Supreme Court’s ruling that parliamentary approval is required for triggering Article 50, the process of beginning formal discussions on the terms of life outside the EU is seemingly drawing closer and this poses a major threat to the UK economy in the coming years.

    Diageo cheers latest results
    Despite the broader index only rising marginally higher, there are several large moves under the surface with some pretty major moves in individual stocks. The biggest gainer on the FTSE 100 this morning is Diageo, with the stock rising by more than 4% after the beverages company reported strong rises in both net sales and operating profit. Banking shares are also enjoying a move into positive territory with RBS, Lloyds and Barclays all rallying following news that RBS has confirmed it has set aside a further £3.1bn to pay fines relating to residential mortgage-backed securities (RMBS). Whilst the news itself isn’t particularly positive investors have reacted well, possibly in the hope that this will draw a line under the ongoing saga. At the other end of the index is Whitbread, with the group that includes the Costa Coffee and Premier Inn brands off by more than 4% after announcing disappointing performance in its restaurant business.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31308

    XTB Market Talk 25th of January 2017
    By XTB Research team

    Pound continues to recover
    Despite some indecision following the Supreme Court ruling yesterday, the pound has continued to rally this morning hitting a 5-week high against the US dollar. The FTSE 100 is also in the green, but is lagging behind its European counterparts with a rise of 18 points meagre compared to the 100 point rally seen on the German bourse.

    Cable tests 1.26 handle
    Since Theresa May gave her speech on the government’s objectives when it comes to Brexit negotiations last Tuesday, sterling has soared higher by more than 500 pips against the US dollar. The British currency has endured a torrid time since the EU referendum but there is a case to be made for the depreciation being overdone and with the GBPUSD holding above its flash crash lows, the market is now looking to recover. However, from a longer term perspective the trend remains down and from a technical perspective the price needs to recapture the 1.28 level before a sustained move higher can occur. Fundamentally speaking little has changed to support the pound and whilst Theresa May has outlined her aims, many consider these to verge on the over ambitious and there remains severe potential headwinds to the currency going forward.

    US stocks hit record highs
    The FTSE100 is enjoying a boost in global sentiment today with stock markets on the continent and across the Atlantic rallying higher. The German Dax 30 hit its highest level of the year this morning after yesterday US stocks resumed their rally with the S&P500 posting another all-time high. Shares in London are lagging somewhat due to the rise in the pound, but they are in positive territory and looking to reclaim recent losses. Ashtead Group is leading the way and higher by more than 3% with Miners offering able support after BHP Billiton lifted the entire sector following the release of a positive trading statement. BT is in the green but the 1.5% gain pales in significance when compared to Tuesday’s sharp sell-off of more than 15%. Gold prices reversed from their highest level in 9 weeks yesterday and the decline in the precious metal can be seen in Fresnillo and Randgold Resources with both stocks declining by approximately 3% today.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31220

    XTB Market Talk 24th of January 2017
    By XTB Research team

    Supreme Court rejects Article 50 appeal
    This morning, the highest court in the UK rejected an appeal by ministers against a High Court ruling that blocked their decision to trigger Article 50 without parliamentary approval. The pound has fallen on the news, moving back below the 1.25 handle against the US dollar whilst stocks have popped higher with the FTSE 100 recovering from a soft start to turn positive on the day.

    Will ruling delay Brexit?
    UK PM Theresa May has set a deadline of the end of March for triggering Article 50 and formally beginning the Brexit process, but today’s events threaten to cause a delay. Now a one-line Bill is expected to be drawn up and debated in Parliament, with the government hoping that this will go through both the Commons and the Lords promptly before become law as an Act of Parliament. Whilst this morning’s announcement will not please Mrs. May it is unlikely to ultimately make a large difference and the balance of probabilities suggest that the self-imposed deadline will be met. Leader of the opposition Jeremy Corbyn has already reacted and stated that the Labour Party will not seek to frustrate the process for invoking Article 50 however they will seek some amendments, which they believe will be preferential. The pound traded up to its highest level against the US dollar since mid-December yesterday but the market has reacted negatively to the announcement. This depreciation is largely due to the fact that the government doesn’t have to consult the Scottish, Welsh or Northern Irish assemblies before triggering Article 50 and this absence of devolution removes a potential roadblock which would likely cause a further delay.

    BT shares plummet on accounting error
    The stock of BT has come under heavy selling this morning with declines just shy of 20% after the telecommunications firm stated that it was forced to write down the value of its Italian business by £530m because of years of inappropriate behaviour. The business began investigating its Italian unit’s accounting practices in October and the sum announced today is far higher than the £145m initially anticipated, and the firm has warned it would affect its results until 2019. The broader UK blue-chip index is higher by around 20 points despite the 17% drop in the share price of BT as well as sizeable declines in easyJet (-7%) and Dixons Carphone (-5%). The rise is due in part to the Miners with strong moves higher seen in Anglo American, BHP Billiton and Rio Tinto seeing the trio occupy the top three spots on the benchmark. Shares in the Banking sector are also recovering after a soft start to the week with Barclays and RBS both up by more than 1%. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31153

    XTB Market Talk 23rd of January 2017
    By XTB Research team

    UK stocks start the week on the back foot
    The FTSE100 is under some selling pressure this morning and trading lower by around 40 points. The leading UK stock index posted its first weekly loss in over a month on Friday and has continued lower out the gate today. The pound is broadly higher on the day and has moved back above the 1.24 handle against the US dollar.

    Banking stocks lead the fallers
    Several of the worst performing stocks on the FTSE 100 come from the banking sector with RBS, Lloyds and Barclays all firmly in the red this morning. Paddy Power is also under pressure and lower by 2% after the bookmaker blamed football results in December and Donald Trump’s unexpected US election win for losses of around £40m in the final quarter of 2016. The ongoing uncertainty surrounding President Trump has seen Gold prices remain well-supported today and the rise can be seen in Antofagasta and Fresnillo, with stocks sensitive to the price of bullion sitting at the top of the index. In general, risk appetite has waned in recent sessions as market participants are taking a more measured approach in contrast to the “get-me-in-anywhere” attitude that contributed to the strong rally at the tail-end of last year and spilled over to the start of 2017 in driving stocks to record highs. This isn’t to say that the FTSE is set for a significant correction but the record-breaking run has come to a fairly abrupt halt and traders will be closely monitoring developments on both sides of the Atlantic in an attempt to determine the path of least resistance going forward.

    Oil lower despite positive meeting of producers
    Benchmarks for crude oil are also lower today, despite seemingly positive developments over the weekend. OPEC said it was near its target of cutting production by 1.8 million barrels of oil per day, just under two months after the deal was agreed upon. Countries not in the cartel have also promised to curb output to stabilise the market and comments from the Russian Energy Minister following the first meeting of a committee set up to monitor the deal suggest that both OPEC and non-OPEC countries have made a strong start in delivering on these. Alexander Novak described the deal as a success and stated that all countries are sticking to their quotas, which has led to results above his expectations. In addition to positive noises coming from the group, the US dollar is also depreciating today with a drop in the buck giving crude in dollar-denominated terms a de facto boost, but still failing to send price higher.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #31033

    XTB Market Talk 19th of January 2017
    By XTB Research team

    Pound continues higher as May speaks in Davos
    The pound is gaining against all its major crosses this morning as another speech from UK PM Theresa May has been warmly greeted by the currency markets. The gain in sterling is causing losses on the stock market however, with the FTSE 100 lower by more than 40 points at the time of writing.

    May talks up the pound
    The speech delivered by Theresa May in London on Tuesday saw the pound post its largest rally in several years and whilst today’s gains are meagre in comparison, the currency is once more reacting positively to Brexit comments from the PM. Speaking at the world economic forum in Davos Mrs. May used similar rhetoric to earlier this week by stressing that despite the intention of her government to take the UK out of the single market they remain focused on global trade. Fears that the economic consequences of Brexit would be relegated to the back burner whilst immigration controls were prioritised in negotiations now seem overdone and it is clear that the UK are hoping for as little disruption to trade as possible. Whilst critics will point out that Mrs. May’s aims are optimistic at best and unrealistic at worst, many will take heart in the news that she is at least attempting to avoid a cliff-edge scenario.

    Royal Mail slumps despite posting solid Christmas figures
    Shares in Royal Mail have slumped by more than 5% this morning after the postal service company blamed business uncertainty for a collapse in UK letter revenues. The stock is sitting at the foot of the FTSE 100 today and CEO Moya Greene has said that while parcel volumes continued to rise over the crucial festive season, the company experienced a continued drop-off in what many people would call junk mail and wider business activity. After hitting its highest level in more than 8 weeks earlier this week, Gold prices experienced their largest decline of the year as US Fed Chair Yellen struck a hawkish chord whilst speaking in San Francisco. This drop has been felt in Gold related stocks with Fresnillo and Randgold Resources both off by more than a percent. Despite the declines for the broader index there are still a number of stocks rising with Rolls Royce continuing its bright start to the year and moving back above the 700p mark.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30932

    XTB Market Talk 18th of January 2017
    By XTB Research team

    UK unemployment remains at 11-year low
    This morning has seen the release of the latest data on the UK labour market with the overall picture continuing to show strength. However, the Pound is lower across the board after yesterday’s stellar gains which saw the currency post its biggest intraday climb against the US dollar since 2008 following Theresa May’s Brexit speech. The strength in sterling weighed on the stock market with the FTSE 100 posting the largest decline of the year and wiping out several days worth of gains.

    May delivers softer stance on Brexit
    Tuesday’s speech on the government’s objectives heading into Brexit negotiations from the UK PM was highly anticipated and Theresa May didn’t disappoint. Whilst Mrs. May used a scattering of strong phrases throughout, such as “no deal for Britain is better than a bad deal for Britain” the overall rhetoric was softer than many in the markets had feared, and the pound reacted in kind by rapidly appreciating. The biggest negative from an economic point of view was the confirmation that the UK will not seek to remain in the single market, but this point was already widely discounted in the markets and expected following recent comments from the PM. This was also toned down to a certain extent as Mrs. May stressed the UK would seek the greatest possible access to the single market from the outside, a customs agreement and the fact that the Brexit deal will have to be voted on in parliament has led many to conclude that it won’t be as “hard” as previously thought. Despite remaining stern and not refraining from firing off the odd warning to her neighbours on the continent, this speech was constructive and ambitious and the foreign exchange market reacted positively to Mrs. May making it clear that she wanted to avoid a cliff edge.

    UK data continues to support economic strength
    Barring the first few readings on economic indicators following the EU referendum, UK data has remained robust and the latest figures on the labour market have done little to dispel this notion of a healthy economy. The unemployment rate has remained at 4.8% – its lowest level in over a decade – and both the claimant count change and average earnings numbers beat forecasts. The drop of 10.1k in the claimant count change represents the largest monthly decline since March of last year and is a more timely measure than the unemployment rate as it covers the period up to the end of 2016. A 2.8% rise in the average earnings index, and an upward revision of 20 basis points to the prior reading of 2.4% suggest that workers’ salaries are rising. Whilst higher wages seems like a positive on the face of it, there can be economic issues if they rise too fast as this can quickly contribute to greater inflation. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30910

    XTB Market Talk 17th of January 2017
    By XTB Research team

    UK Inflation hits two-year high
    Official figures released this morning have shown that UK inflation jumped to its highest level in more than two years in December. The news sent the pound surging higher against the US dollar with the exchange rate moving back above last week’s closing level and closing the gap. The FTSE 100 has seen some selling in early trade with the weakness coming from both a rise in the local currency and a soft start for European bourses which has dampened the mood in London.

    Rising prices to squeeze consumers
    The 1.6% rise in the consumer price index (CPI) for December was a marked pick-up from the 1.2% seen previously, with air fares, food prices and fuel all contributing to the increase. Whilst the annual rate remains below the Bank of England’s target of 2%, the rise could start to put some pressure on the institution that has faced criticism from many quarters of late for its policy response to the EU referendum. Critics have focused on Governor Carney and the MPC’s decision to easy policy aggressively in the wake of the Brexit vote, despite the economy continuing to appear robust. Whilst expansionary policies supportive of growth are deemed favourable in that respect, a side effect of monetary easing can be rising inflation and today’s data gives added weight to this line of attack. This means that the bank could find itself stuck between a rock and a hard place in the not too distant future if prices continue to rise and we see a slowdown in economic activity.

    Over to PM May
    Later this morning UK Prime Minister Theresa May will speak at Lancaster House in a highly expected talk that is expected to lay out 12 key negotiating objectives for the UK in the Brexit discussions. The rhetoric is expected to be stern as Mrs. May is believed to call for a “clean” Brexit which on the face of it appears to be synonymous with the so-called “hard” Brexit many Europhiles feared. The crux of the matter from an economic point of view falls on whether or not the UK will remain a member of the Single Market or Customs Union, with the UK PM expected to signal that this is not a priority as she focuses her attention more on immigration controls. Despite the recovery seen in the pound this morning the currency remains vulnerable to this speech and there will be many nervous policymakers watching the market, hopeful that the speech won’t cause erratic moves with the October flash crash in Sterling still fresh in the memory. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30822

    XTB Market Talk 16th of January 2017
    By XTB Research team

    Pound plummets on “hard Brexit” fears
    The pound has begun the week on the back foot, with the currency lower across the board following comments from Theresa May which suggest that the Prime Minister will set Britain on course for a “hard Brexit”. Several newspapers over the weekend reported that Mrs. May will state during her speech at Lancaster House tomorrow that the UK is prepared to leave the single market, customs union and European Court of Justice with her priority in negotiations being to control immigration.

    Hammond supports hard line approach
    Despite Downing Street describing the latest reports as speculation there is a growing sense that the UK will look to take a hard-line approach to negotiations with the EU. Chancellor Philip Hammond has warned that the UK could slash business taxes if it is denied access to European market after Brexit, with the aggressive stance that is being adopted causing concerns in the financial markets. It is now nearly 7 months since the historical referendum took place and the economy has carried on more or less unperturbed as many business leaders have adopted a wait-and-see approach, rather than attempt to pre-empt what the future may bring. However this growing sense of preferential economic terms taking a backseat at the negotiating table is a worrying development and suggests that there could be more adverse effects to business than is strictly necessary. Having said that, news that US President elect Donald Trump will offer Britain a “quick and “fair” trade deal when he takes his place in the Oval Office later this week in a development that would be warmly welcomed in London and could substantially strengthen the UK’s hand in negotiating with the EU.

    Quiet start for the stock market
    The FTSE 100 is trading marginally higher by 6 points this morning with the blue-chip index beginning the week in a quiet manner. The best performing stocks come from the mining sector with Anglo American up by over 2% already. Fresnillo and Randgold Resources are also both gaining as they seek to continue their strong start to 2017. Housebuilders and banks are keeping any gains for the broader index in check with RBS falling by almost 3% and currently languishing at the bottom of the benchmark. Barratt Developments and Taylor WImpey are also lower by 2.1% and 1.9% respectively with some weakness evident in the housebuilding firms after a decent rally seen so far this month. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.
    Author

  • #30724

    XTB Market Talk 13th of January 2017
    By XTB Research team

    Can the FTSE make it 12 in a row?
    The FTSE 100 posted a record high closing level last night for the 11th session in a row after managing to eke out a small gain following some early weakness. Superstitious traders may be fretting a little going into the weekend with today being Friday the 13th, but those of a rational disposition will see little to suggest that this incredible run will end anytime soon. The leading benchmark in London is higher by 32 points at the time of writing, while the pound – rather unusually this week – is also rising across the board.

    Housebuilders lead stocks higher
    Barratt Developments and Taylor WImpey are higher by 3.5% and 2.0% respectively this morning, with shares in housebuilders rising strongly from the final open of the week. Barratt’s stock is rising despite announcing that it built fewer homes in the second half of last year after a slowdown in the London market, with completions falling nearly 6% despite a nine-year high outside the capital. This could well just be an example of overly pessimistic expectations putting a favourable tint on what is overall a fairly negative development. Elsewhere Miners are continuing their latest ascent with Anglo American, Glencore and BHP Billiton all in the green once more.

    Gold stocks begin to fade?
    Following recent gains, Fresnillo is trading a little softer this morning with the stock lower by more than 2% and residing at the bottom of the blue-chip index. Futures contracts on Gold bullion broke back above the $1200/oz level yesterday but they lost their shine late in the day and ended up closing below this level, which is a major development not only from a psychological perspective but also from a technical standpoint. Also in negative territory this morning is Rolls Royce and BAE Systems as shares in the Aerospace & Defence sector are under some selling pressure. Associated British Foods has continued below Thursday’s low today as the fallout from a disappointing set of earnings continues to weigh on price. The retailer’s share price is now lower by over 4% on the week and is not enjoying the best start to the new year. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30700
    Guest Writer
    Guest Writer
    Participant

    XTB Market Talk 12th of January 2017
    By XTB Research team

    ​FTSE sets record winning streak
    The FTSE 100 posted a 12th consecutive higher close yesterday to set a record for the best run of successive gains since 1984. A depreciating pound has been a near constant support to the stock market during this period and yesterday the currency fell to its lowest level against the US dollar since October.

    Resurgent pound to derail FTSE rally
    Whilst the pound did trade down to its lowest level in three months against the US dollar yesterday there was a recovery in the evening session after Donald Trump’s bizarre press conference led to some weakness in the buck. There was nothing specific that the president-elect said to cause the softening of the US dollar – it was more a case of what he didn’t say. The comments related mainly to the recent scrutiny regarding Mr. Trump’s relationship with Russia and a failure to discuss any of the expected changes in fiscal policy, which was arguably the basis for the appreciation of the greenback since his election, has caused declines in the US dollar.

    Gold prices hit 7-week high
    The best performing stocks on London’s top share index this morning are Fresnillo and Randgold Resources with both benefitting from a resurgence in the price of Gold bullion. The precious metal has traded up to it’s highest level in seven weeks this morning as expectations for higher rates in the US are reigned in. Marks & Spencer is also rising today after announcing solid Christmas results. M&S has continued the recent run of good trading results amongst supermarkets this week with the firm reporting a 1.3% increase in like-for-like sales in the final trading quarter of last year. CEO Steve Rowe has declared himself pleased with the latest set of earnings and points out that the Clothing & Home sector has been the best performer in his commentary. The last 12 months have proven testing for shareholders, with the stock price falling by around a fifth but recent signs suggest better times are around the corner. The changes made by Mr. Rowe seem to be helping and with the supermarket sector as a whole enjoying buoyant Christmas trade there are several reasons for investors to feel quietly confident going forward.

    Associated British Foods slumps on pessimistic outlook
    The FTSE 100 is marginally lower on the day despite these rises with Associated British Foods languishing at the foot of the benchmark and off by 3.5% on the day. The retailer announced an 11% rise in sales at Primark on a constant currency basis in what could be seen as a solid trading update. The 11% rise covers the 16-week trading period including Christmas on a comparative basis and so on the face of it seems fairly positive. However on a longer term basis, the retailer reiterated previous guidance that margins will continue to be suppressed in the retail space by currency pressures owing to the weak pound and strength of the US dollar. The firm has minimised its exposure to this currency headwind by locking down foreign exchange contracts already for the coming year but this will ultimately mean it won’t benefit from any correction in dollar strength. Of growing concern is the firm’s slow progress in international sales, with the retailer highlighting sales being held back by declines in Holland and Germany. This strategic move to diversify its revenues streams to outside of the UK is much needed but proving to be a quite slow transition.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30611

    XTB Market Talk 11th of January 2017
    By XTB Research team

    Sterling sinks on economic data
    The pound has taken another leg lower after a plethora of economic releases from the UK have seen more selling in the currency. Sterling briefly popped below 1.21 against the US dollar following the releases to trade at levels not seen since late October. The common theme of a falling currency and rising stock market of late has continued with the FTSE 100 rallying to post yet another record high.

    Mixed data fails to support the Pound
    Despite a better than expected reading for manufacturing production and the industrial equivalent, the pound has continued its descent today and is looking precipitous. Both these economic indicators came in above expectations but a decline in construction output and in particular the drop in the goods trade balance figure have caused concern for pound traders. Mark Carney is scheduled to testify before the Parliament’s Treasury Select Committee this afternoon and the Governor of the BoE has been coming under a fair amount of criticism lately for his decision to aggressively ease policy following the Brexit vote.

    Supermarkets to pull of a clean sweep?
    Following Aldi and Morrisons beating sales estimates over the Christmas period, Sainsbury’s has this morning released a stellar set of earnings which has seen the stock rise by over 5% to top the FTSE 100’s biggest gainers. Dixons Carphone, BT and Vodafone are also amongst the top performers on the UK blue-chip index. TUI shares have dropped by more than 4% to reside at the foot of the benchmark with the travel company seeing some sizeable selling. Fresnillo is also in the red this morning after the stock has enjoyed a strong ride higher on the back of a bounce in the price of Gold bullion over the past month.

    Solid results bode well for recruiters
    The health of the UK labour market received some support this morning as PageGroup announced a solid set of annual results. The recruitment firm that is listed on the FTSE 250 posted several highlights in their report including a record profit of £163.4M for the fourth quarter. This rise in earnings comes largely due to a 12.4% increase in the EMEA segment of the business, with the UK seeing a contraction of 6.7% due to heightened uncertainty in the market following the EU referendum.

    Whilst the report overall is fairly robust, CEO Steve Ingham strikes a note of caution in his commentary warning that there are several uncertainties which could cause an adverse impact on the recruiter in 2017. The UK initiating Brexit, new economic policies in the US and elections in Europe are the main potential threats seen by Mr. Ingham this year, but he remains confident that the firm can continue to drive profitable growth.

    The share price has now recovered virtually all of the declines seen following the Brexit vote, and this latest trading update will give investors several reasons to feel optimistic going forward. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30550

    XTB Market Talk 10th of January 2017
    By XTB Research team

    Another day another record high for UK stocks
    The bull run seen in the FTSE 100 of late shows little sign of coming to an end with the index posting yet another intra-day record high this morning. The depreciating pound is seemingly the main catalyst for this latest push to uncharted territory, with sterling falling once more in early trade.

    Miners rise as Sterling falls
    Anglo American is leading the way for the latest round of buying in London-listed stocks with the mining firm rising by more than 5% as it continues to build on last year’s impressive performance. Other firms in the sector are also in the green with Rio Tinto and BHP Billiton adding to recent gains and benefitting from the pound’s latest decline. The soft start to the week for banking shares has continued with RBS and Barclays lower by 2.1% and 1.1% respectively at the time of writing.

    Supermarkets rise on Morrisons festive cheer
    Shares in Morrisons, Tesco and Sainsbury’s are all rising today after the former released strong sales numbers during the festive period and announced an upbeat forecast for its annual earnings. Morrisons reported its best performance over the Christmas period in seven years with like-for-like sales rising by 2.9% in the nine weeks to January 1st. The strong set of results support those made by Aldi yesterday in suggesting that supermarkets enjoyed a stellar festive period. As well as reporting better than expected figures Morrisons also revised higher its annual profit projection which is now forecast to come in at £330-340M – above the £326M consensus estimate amongst analysts.

    After some testing times in previous years, 2016 was a good one for investors in Morrisons with the share price rising by more than 50%. This latest set of results will only serve to add to the growing level of optimism around this stock which is now clearly trending higher and seeking to get back close to its record highs around 300p.

    Earnings for Topps Tiles slip
    Investors have met the latest trading update from Topps Tiles with a mixed reaction after a sharp slowdown in sales growth for its fiscal first quarter. The stock is lower by around 1% in early trade and the recent woes for the FTSE 250 listed firm don’t seem to be over yet. The retailer warned back in October that trading conditions had started to soften and this has reduced investor expectations since then, hence why we have seen a rather muted reaction to the sales slowdown. Nevertheless, this first quarter trading statement should be viewed as yet another warning sign. Not only were like-for-like sales sharply lower than previous quarter – at 0.3% compared to 1.4% – but its first quarter also contained an additional trading day which the firm maintained would have had an additional benefit to like-for-like sales of around 0.6%. So in truth, sales growth of just 0.3% is actually worse than it stands on paper. The continued weakness of the pound and any further hits to UK consumer confidence would likely see a deterioration in Topps Tiles’s performance this year.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30497

    XTB Market Talk 9th of January 2017
    By XTB Research team

    May sends Sterling sinking
    Comments from the UK Prime Minister over the weekend have caused the Pound to sell off this morning with Theresa May indicating that the country will leave the EU single market. The Pound has fallen against all its major peers in light of this news and currently trades below the 1.22 handle against the US Dollar – the lowest level since late October.

    Chance of a “hard” Brexit rises
    It is quite remarkable that almost 6 months after the historic vote by the British public to leave the EU, still very little is known about the terms and conditions upon which this separation will be made. This is of particular concern given that Theresa May insists she will trigger Article 50 and thus begin the formal process of leaving the EU before the end of March. Mrs. May’s latest comments have cause a bit of a stir in the financial markets as it appears more likely that membership of the single market isn’t a top priority from the UK perspective at the negotiating table, with control over borders and laws superseding it. Official estimates of the economic impact of a Brexit on similar free trade agreement terms to Norway – which now seems the most likely case – suggest that the adverse effects could be twice as large in terms of growth when compared to leaving but retaining single market membership. This more hard-line approach looks set to cause greater economic turmoil in the near term but let’s not forget that many official economic forecasts on the economy following Brexit have proved inaccurate and overly pessimistic.

    FTSE hits record highs on falling pound
    The drop in the pound has boosted stocks in London this morning with the FTSE100 adding to last week’s impressive gains to post yet another all-time high. The best performing stocks on the index come from the mining sector which generates the vast majority of its revenues abroad and therefore benefits from a fall in the pound. Glencore, Anglo American and BHP Billiton are all enjoying bright start to the week and moving firmly higher in early trade. At the other end of the index is RBS and Lloyds Banking Group with both taxpayer part-owned banks seeing some weakness. News this morning that the UK government is no longer the biggest shareholder in Lloyds after cutting its stake to less than 6% has failed to boost the share price. RBS remains 71.5% owned by the government. Chancellor of the Exchequer Philip Hammond has said that the fact they are no longer the largest shareholder is further evidence that the Treasury is on track to recover all of the £20bn injected into the bank during the financial crisis.

    Aldi posts impressive festive results
    Aldi has reported record trade over the key Christmas period with the discount supermarket announcing a 15% rise in December sales. Rather surprisingly the retailer stated that there was strong demand for its premium range, which has been launched to compete with higher-end retailers such as Waitrose and Marks & Spencer. The market share for Aldi has grown in recent years as the traditional big four supermarkets have struggled to adapt to the threat of new entrants who have undercut them on price. However news that Aldi is not just competing at the lower end of the market but has started to make inroads into the premium end comes as something of a surprise and could mean the threat to the high street’s traditional supermarkets is even greater than previously thought. Following the disappointing results announced from Next over the festive period last week, some were led to believe that it had been a bleak Christmas for retailers. This latest update from Aldi, as well as data from payment card company Visa that suggests the final three months of 2016 saw the strongest increase in consumer spending in two years will have gone some way to allay these fears. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30421

    XTB Market Talk 6th of January 2017
    By XTB Research team

    Attention turns to US jobs report
    This afternoon at 1.30pm (GMT) sees the first Non-farm Payrolls (NFP) report of the year released as the focus shifts across the Atlantic to drive flows into the weekend. The FTSE 100 is marginally lower by a couple of points at the time of writing whilst the Pound is lower against all major currencies apart from the Japanese Yen.

    Indications of a soft employment number
    As we look ahead to this afternoon’s release of the December data on the US labour market, there has been some recent evidence to suggest that we could be in store for a disappointment in what is arguably the biggest economic release of them all, the NFPs. Yesterday’s ADP employment change and the employment component of the ISM non-manufacturing both came in below forecasts and with consensus estimates calling for 175-180k jobs added – inline with the prior reading – there is some potential scope for a miss. Since the US election in early November the largest moves in the markets have been driven more by expectations of shifts in fiscal rather than monetary policy, with US stock markets and the Buck both back at levels seen before the December rate hike whilst the yield on US government debt is actually lower now. This does suggest that today’s release may have a slightly diminished impact on the markets compared to prior iterations.

    FTSE hovers near record close
    The FTSE 100 is on course to post its highest ever weekly closing level after four days of trade that have seen the record intraday high surpassed on three occasions. The market has been trading sideways, by and large, after getting off to strong start to the year with a large rise on Tuesday. Worldpay has seen a rise of more than 2.5% this morning and the payments provider is the biggest gainer on the UK blue-chip index. Banking stocks are also looking to end the final trading session of the week higher with Lloyds Banking Group and Barclays enjoying notable increases. Randgold Resources and Fresnillo are the biggest losers on the benchmark after impressive runs higher so far this week. Today’s weakness in this pair could be down to some profit-taking as the price of Gold Bullion has recovered to trade at it’s highest level in a month but is in the red on the day.

    Surge in UK Labour costs hint at rising inflation
    British labour costs have risen at the fastest annual rate since late 2013 in the three months after the country voted to leave the EU according to data from the Office of National Statistics (ONS). A 2.3% increase in Q3 2016 represents a 10 basis point rise from the prior quarter and could provide an unwanted headache for the Bank of England. Andy Haldane, the Chief Economist at the Bank of England, confessed yesterday that the Central Bank were wrong to predict a sharp downturn in the aftermath of June’s shock Brexit vote after a survey of the UK services sector came in at a 17-month high to complete a hat trick of strong PMI readings this week. The decision from the rate-setting body of the Bank to cut interest rates and relaunch the QE programme in August – largely due to a sharp contraction in the very same industry surveys which suggested the economy was in rude health this week – has been roundly condemned and the increasing levels of inflation in the economy could lead the bank to consider reversing their monetary policy stance. Governor Carney has spoken of a limited tolerance for above target inflation and with the increase in labour costs announced coming in higher than the 2% threshold set by the BoE, there is some suggestion this could lend support to the case of some monetary tightening. However this criticism is a little short-sighted and reactionary in nature, with very few in the world of finance openly skeptical at the time of the policy change in the late Summer and with the economic environment outside the EU as much of an unknown now as it was back then, a contractionary shift in monetary policy now would be a mistake.

    ​Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30323

    XTB Market Talk 5th of January 2017
    By XTB Research team

    ​Services PMI rises to highest since July 2015
    The UK services PMI made it a hat trick of strong data points in consecutive days this week, with the reading rising to a 17-month high of 56.2. Following the manufacturing and construction equivalents beating forecasts, today’s release suggests that the UK economy is performing well and is predicted to now show a 0.5% increase for fourth quarter GDP. The pound has risen off its lows in the past half hour since the data was released whilst the FTSE 100 continues its impressive march, printing yet another record high.

    Persimmon looks to rebuild
    The best performing stock on the FTSE 100 this morning is housebuilder Persimmon which has risen by more than 5% after posting an upbeat trading update. The firm reported an 8% rise in revenues to £3.14bn, with sales of homes increasing by 4%. Whilst share prices still remain 13% below its pre-Brexit vote highs it has done well to recover since the vote to leave the EU, which triggered a dramatic 38% fall in its share price. Since then, investor confidence needed to be rebuilt. The firm expects gross margins to improve in the second half of the year and forward sales remains strong at new land sites, which will help maintain that restoration of confidence. Nevertheless, the Brexit vote remains a significant thorn in the firm’s side and may continue to hold the share price back at a time when UK stock indices are hitting record highs.

    Record UK car sales but lower forecast for 2017
    The number of new cars sold in the UK hit an all-time high in 2016 – the second consecutive year that records have been smashed. The Society of Motor Manufacturers and Traders (SMMT) said demand hit 2.7 million last year, a rise of 2% on 2015. A combination of factors can be attributed to the rise with strong consumer confidence, low-interest finance packages and a number of new models being launched all playing their part in driving higher sales. Whilst the trend has been higher with five consecutive years of increased sales seen since the recession of the late 2000s, the SMMT predict that this run will come to an end this year with new registrations expected to fall by 5-6%. Perhaps in light of this Rolls Royce has seen its share price decline today, falling by just shy of 4% at the time of writing. As is the case with many industries in the UK, the impact of Brexit has yet to be seen on the car market – however this doesn’t mean that there will be no tangible effect. The SMMT forecast that if the UK was unable to trade freely with the EU and tariffs were introduced, it would add about £1500 to the price of each imported car.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30183

    XTB Market Talk 4th of January 2017
    By XTB Research team

    Optimism in the UK construction sector
    Following yesterday’s better than expected manufacturing data from the UK, we’ve seen some positive news out of the construction sector this morning with a survey showing that purchasing managers are more optimistic than previously thought. After posting another record peak on Tuesday, the FTSE 100 is little changed on the day and trades pretty much flat. Sterling is also showing no large moves and remains under the 1.23 handle against the US dollar.

    Two down, one to go
    The last two days have seen higher than expected prints in the Purchasing Managers’ Index (PMI) numbers for both manufacturing and construction in a development that displays continued strength in the UK economy. These surveys are widely seen as leading indicators as businesses react quickly to market conditions, with purchasing managers perhaps holding the most current and relevant insight into the firm’s view of the economy. Tomorrow morning, we get the third and final one of these data points and with the services sector being the largest by some distance it holds the greatest importance and potentially the largest impact on the markets. Unsurprisingly, Barratt Developments and Taylor Wimpey are the two best performing shares on the FTSE 100 as property development firms stock rises on the upbeat data.

    Housing market remains robust
    Whilst the latest mortgage data from the UK has come in slightly below expectations with the number of approvals falling to 67,500 for the month of November, overall this can still be seen as supportive of the construction figures in suggesting strength in the housing market. Whilst the below forecast number could be seen as mildly disappointing, the print is still one of the strongest seen in the second half of 2016 and shouldn’t signal too many undue concerns. Recent forecasts amongst mortgage lenders have shown an expected cooling off in the rapid house price growth seen in recent years in 2017, with the pace of increases in London lagging behind the rest of the UK last year for the first time in almost a decade. This is likely to keep demand fairly robust going forward and whilst the uncertainty surrounding Brexit remains a potential economic headwind, the current balance of economic data suggests that the housing market is in good health.

    Retail woes continue
    What is traditionally seen as the best time of year for retailers has disappointed thus far, with shares in Next off by almost 10% today and residing at the bottom of the broader index after the firm reported a disappointing Christmas period and offered a rather bleak outlook going forward. The clothing retailer cut its forecast for its fiscal year which ends this month and also lowered its projections for pretax profit through January 2018 to a range of £680-780M – below estimates of £784M. Marks & Spencer and Burberry have also seen their market value decline on the news as investors appear to be bracing themselves for further underwhelming performance from the high street. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #30089

    XTB Market Talk 3rd of January 2017
    By XTB Research team

    Before we kick off with the analysis, we would like to wish everyone a happy 2017!

    UK Manufacturing hits 30-month high
    The first major economic release of the year from the UK has come in strongly, showing a substantially higher than expected expansion in the manufacturing sector. The FTSE 100 has risen by more than 30 points in the first trading session of the year and in doing so the market has posted another record intraday high. The pound is also gaining on the upbeat print, appreciating against all its major peers apart from the Aussie.

    Good start to busy week of UK economic releases
    A print of 56.1 for the UK manufacturing PMI in December represents the highest print in two and a half years and suggests the economy is on a firm footing as we look forward to 2017. Both domestic and overseas demand improved to contribute to this stellar reading which was far better than expected with a fall to 53.0 forecast after 53.6 previously. The rates of expansion seen in output and new orders were among the fastest seen during the survey’s 25-year history and whilst the fall in the pound can be held slightly responsible for increased foreign demand, the strong contribution from the domestic market shows there is clearly more at play here than a simple currency boost due to the weak exchange rate. The equivalent readings for construction and services are due out on Wednesday and Thursday respectively, and if we get more strength in these – in particular the latter, which represents the biggest sector of the economy – then we could expect a stronger 2016 Q4 GDP print than previous thought. Predictions for a recession in the second half of last year were widespread following the Brexit vote, but this latest data suggests that these were wide of the mark, with the economy now expected to not only have managed to avoid a contraction but actually posted strong growth in the subsequent months.

    Bright start to 2017 for stocks, but retailers lag
    The majority of stocks on the leading UK benchmark have begun the New Year on the front foot with InterContinental Hotels Group leading the way and rising by 3% on the day. Banks are continuing their decent run of late with Barclays, Lloyds Banking Group and RBS all firmly in the green at the time of writing. Languishing at the foot of the index is Next, with the retailer falling over 4% after poor figures for the UK high street were released today. Footfall fell nearly 13% nationwide while in shopping centres it slumped by a massive 50% as a combination of poor weather, an early December spending spree and bank holiday trading hours weighed on consumer spending. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29996

    XTB Market Talk 30th December 2016
    By XTB Research team

    Final trading day of the year
    The FTSE 100 is trading lower by approximately 20 points today, as some year-end rebalancing has seen some weakness in the final trading session of 2016. The countertrend theme is also evident in the pound which is higher on balance and gaining almost 1% on the day against the Japanese Yen.

    FTSE to end 2016 near all-time high
    Despite the weakness seen this morning it has been a good year for stocks on the leading UK benchmark with the FTSE 100 recovering from a soft start to post impressive gains. The inflexion point for the market came shortly after the 23rd June, when Britain’s decision to leave the EU sent the pound plummeting and gave a major boost to the majority of the index’s revenues, in sterling terms, which are earned abroad. This obviously shows that the benchmark is no longer an accurate barometer for the strength of the UK economy with external influences having a far greater impact on the market. From a technical point of view there’s lots to suggest the market is trending higher and with it hard to see a sustained recovery in the pound next year due to the ongoing uncertainty surrounding Brexit, bulls will be feeling joyous and optimistic heading into 2017.

    Potential pitfalls in 2017
    Whilst everything seems rosy in the financial markets at present there remains several potential catalysts to derail the recent rally in stocks as we look forward to the turn of the year. Firstly, political instability could rise even further next year and whilst many investors are looking through the possible downsides of the Brexit and Trump administration the risks from this field remain elevated. The disagreement over whether the triggering of Article 50 requires parliamentary approval – which has led to a growing sense that UK PM THeresa May doesn’t really know what she’s doing – should serve as a major warning sign for those who believe the Brexit process will be smooth and have a negligible impact on the UK economy in the short term. Elections in France, Netherlands and Germany could see a further strengthening of populist politicians in roles of power on the continent which could in turn serve to threaten the longevity of the EU itself.

    Across the pond Donald Trump remains erratic and unpredictable – as shown by a series of recent tweets – and those that pointed to his acceptance speech as a turning point in his political style will now surely concede he remains a potentially huge liability. There appears to be very little of this possible downside to his presidency currently priced into the markets, which seems remarkable considering how he has handled himself over the past 12 months. Supporters of his will point to tax reforms and fiscal stimulus as positives and hope that Mr. Trump avoids putting his foot in his mouth once more, with a blunder in the Oval Office possibly having a disastrous effect. Having said that, if 2016 taught us anything, it was to expect the unexpected and along these lines a considered, statesmanlike first year from the President-elect, the avoidance of political disruption in Europe and an orderly beginning to the Brexit process could in fact turn out to be the biggest surprise of them all. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29950

    XTB Market Talk 29th December 2016
    By XTB Research team

    FTSE flirts with all-time high
    The FTSE 100 is this morning within touching distance of posting a record high, as the market currently sits less than ten points from its all-time peak. Despite being higher against the US dollar the pound is losing ground elsewhere and is lower against all its other major currencies.

    Gold stocks look to recover into year-end
    The biggest gainers on the FTSE 100 this morning are shares sensitive to the price of Gold with Fresnillo leading the way and higher by around 2.5%. Randgold Resources is also enjoying a strong up day and rising by just under 2% as the price of Gold bullion increases following the sharp recent declines seen over the past couple of months. Barclays currently sits at the foot of the blue-chip index and has declined by a little over 1.5% so far. There is some notable weakness in financials with Standard Chartered and Lloyds Banking Group also in the red. Mining stocks are falling this morning after Wednesday’s gains with Glencore and BHP Billiton both handing back some of yesterday’s rise. Overall the the FTSE 100 is little changed and lower by 7 points at the time of writing.

    London housing market cools
    According to Nationwide Building Society the average rise for house prices in London in 2016 underperformed the rest of the UK for the first time in eight years as buyers are increasingly stretched by the affordability given the recent rapid rise. This year has seen a 3.7% increase in home prices in the capital which is a large fall from the 12.2% gain in 2015 and also below the UK-wide figure of 4.5%. As well as the strong recent rally seeing demand dampened, Britain’s vote in June to leave the European Union and an increase in stamp duty have also weighed on London’s property market. Nationwide predict that the UK economy will slow modestly next year, which they believe will likely result in a less robust labour-market and modestly slower house-price growth. Housebuilders have seen no clear reaction in their market value to the news with Barratt Developments slightly lower and Taylor Wimpey rising today.

    Indian economy surpasses UK’s
    2016 will see the economy of India be larger than the UK’s for the first time in more than 100 years as a combination of Britain’s recent woes and the continued rapid economic growth on the sub-continent both contributing to this historic landmark. A large reason for this is the 20% decline seen in the value of the pound over the course of the last 12 months which means that the UK GDP for 2016 comes in at $2.29 trillion compared to $2.30 trillion for India. This overtaking in economic terms from India has long been predicted given the fast pace of growth seen over the past 25 years, however most thought it wouldn’t be until 2020 that the economy exceeded the size of the UK’s. The Brexit vote and subsequent sharp depreciation of sterling have seemingly accelerated the process. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29908

    XTB Market Talk 28th December 2016
    By XTB Research team

    Santa Claus rally begins
    The FTSE 100 is higher by a little more than 20 points at the time of writing as the so-called Santa Claus rally appears to have begun. Observers of the markets have for many years noticed a strong propensity for stocks to rise in the period between Christmas and the New Year and this phenomenon appears to be playing out once more. The pound is trading lower against all its major pairs, with the weakness in sterling also contributing to the rise in the stock market.

    Miners lead the charge
    The best performing stocks on the leading UK stock benchmark come from the mining sector with BHP Billiton the biggest gainer and higher by more than 4% on the day. The first trading session for the market since the Christmas break has been a good one for the mining sector with Anglo American, Rio Tinto and Glencore all currently sitting on impressive gains. At the other end of the index, airlines are seeing some selling pressure with British Airways owner International Consolidated Airlines and easyJet lower by approximately 2.3% and 1.5% respectively.

    More challenges ahead for housebuilders?
    It’s been a challenging year for housebuilding stocks, with Barratt Developments and Taylor Wimpey seeing a sharp sell-off following the Brexit vote in June. Despite a modest recovery since, shares in both these firms are lower today, with a gloomy outlook for the housing market in 2017 from Halifax doing little to provide any festive cheer for investors. Halifax, the UK’s biggest mortgage lender, released their latest overview this morning and predicted that the housing market would slow next year. They forecast that UK house prices will continue to rise in 2017 but at a reduced pace of between 1% and 4% compared to an of average of 10% recorded in March this year. The main reason cited for this slowdown is the higher than normal degree of uncertainty surrounding the economy as the terms upon which the UK will leave the EU continues to be shrouded in a veil of mystery. Additionally the early part of this year saw a surge in demand for houses as buyers looked to take advantage of a favourable stamp duty rate before the levy was raised, which likely contributed to a faster rate of price growth.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29883
    Jacob Maas
    Jacob Maas
    Keymaster

    How do you think the market will move after the Trump take over on the 20th of January?

    • #29979

      December 28, 2016 at 6:37 am, Jacob Maas

      How do you think the market will move after the Trump take over on the 20th of January?

      Hi Jacob,

      Thank you for the question, please see below the reply of our research team:

      It’s a hard to task to predict how markets will move once Trump takes over on the 20th January largely due to the unpredictability of the President-elect himself. Since the election was won in early November we have seen a large reflationary trade take place with the stock market rallying strongly alongside a surge in the US dollar and yields on US government bonds. The former is widely attributed to an expected widespread fiscal stimulus which proponents hope will take over the mantle of monetary policy is boosting the stock market. Many similarities have been drawn to Reaganomics which saw strong economic performance in the 1980s. However very little attention has focused on the differences between the economy that Reagan inherited compared to that which Trump will.

      As Reagan moved into the oval office unemployment was at historically elevated levels whilst the ratio of debt-to-GDP was far lower. These vast differences in the economic backdrop make it unlikely that comparable policies will yield comparable results. If the first 100 days of Trump’s tenure play out as expected then there is no reason to doubt the recent rise on Wall Street however the majority seem to be focusing solely on the positives and giving little consideration to possible adverse effects. One such effect could be that Trump doesn’t enjoy a free run on passing bills through the house despite the Republican control of both the Senate and Congress and this may limit his ability to roll out the desired fiscal stimulus package.

      To summarise for stocks, we expect them to continue to rise unless the policies alter significantly from those widely expected, although we believe there is a greater potential for a correction than is currently priced into the Vix for instance.

      We have a greater conviction that the recent trend higher in both the US dollar and bond yields will persist with there being less potential catalysts to reverse these moves. Overall, Donald Trump is certainly far less predictable with respect to his policies than predecessor Obama and whilst we expect him to favour a higher rate environment he could flip-flop on the issue and perform a U-turn (As he has on many issues such as abortion) especially if the debt level rises substantially and the cost associated with servicing this becomes uncomfortably expensive.

  • #29727

    XTB Market Talk 23rd December 2016
    By XTB Research team

    Shortened session before Xmas
    The FTSE 100 will close early today as the final trading session before the Christmas break sees the closing process usually seen at the end of the day commence from 12:30. It’s been a quiet week for the market with many traders taking early holidays and low volumes seeing no major moves. The blue-chip benchmark is currently trading lower by 4 points on the day.

    Getting into the Christmas spirit
    Sales of Christmas trees in America are higher by 10% compared to last year as it seems that more people are getting into the festive spirit. Having said that a closer look at the data shows a partisan side to tree sales. In states won by President elect Trump sales of the evergreens are going at a quicker rate than those that turned out in favour of Hillary Clinton. It’s been a divisive year in many ways on both sides of the Atlantic with the EU referendum and US election seeing a far greater level of polarisation in views and beliefs than has been commonplace in recent years. However, despite the fears and grave warnings about how life would be under the umbrella of a UK outside the EU and an America under a Trump administration both countries are faring pretty well so far. Granted that Trump is yet to take his place in the Oval office or the UK formally “Brexit” but markets and the general feel amongst the population seems to be far more upbeat than in the immediate aftermath of the votes.

    UK GDP beats forecasts
    Data from the Office for National Statistics (ONS) shows that the pace of economic growth in the 3rd quarter for the UK rose by more than expected in yet another piece of evidence to suggest the Brexit vote is yet to have an adverse impact. Upon closer inspection the data is quite surprising in that it showed an increase in investment whilst trade dragged. Even the most ardent of Brexit supporters would concede that the uncertainty surrounding the terms and conditions outside the EU may lead to a short term slowdown in investment as the unpredictability of the future business environment would present a good enough reason for many to postpone or reduce investments. On the other side, staunch backers of the remain camp would admit that due to the sharp depreciation in the pound a short term pick up in trade was likely as UK goods became relatively cheaper for the rest of the world. Along these lines, with a high degree of uncertainty remaining as the saga regarding the triggering of Article 50 wrangles on and with the Pound lower by 20% against the US dollar – its most widely traded currency pair – since referendum night an increase in investment and fall in trade seems to fly in the face of conventional wisdom – as has been the case with several major events in 2016.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29676

    XTB Market Talk 22nd December 2016
    By XTB Research team

    Monte dei Paschi poised for bailout
    Shares in Banca Monte dei Paschi have risen this morning as a state rescue for the beleaguered bank looks increasingly likely. Stock benchmarks in London seem to be in holiday mode already with the trading range and volumes both substantially lower than average and the FTSE 100 pretty much flat on the day. The pound is seeing some bigger moves though, gaining against the commodity currencies of Canada and Australia but falling elsewhere.

    Stock recovers after early selling
    Following yesterday’s 12% decline, shares in Banca Monte dei Paschi moved lower once more from the open before turning positive on the day, and currently trading higher by a little over 2%. Fading hopes for a private rescue bid was the likely cause of the selling but the bounce comes as a state bailout would at least allow the lender to continue as a going concern. The deadline for retail investors was passed on Wednesday and barring a late surprise this afternoon, the 1pm GMT cut off for institutional investors also looks unlikely to see a buyer step in. The Italian parliament has authorised the government to use more than $20bn to intervene, but the rescue fund could be used to prop up other banks as well. New Italian prime minister, Paolo Gentiloni has vowed not to let the bank fail as the possible contagion effect presents a fear that its collapse could topple the rest of the country’s heavily indebted banking sector.

    Mining stocks weigh on the FTSE
    The worst performing stocks on the leading UK index this morning come from the mining sector with Glencore, Rio Tinto and BHP Billiton all seeing some weakness. All three have enjoyed stellar rises in 2016 and it is quite possible that some investors are looking to book profits and take some money off the table before year end. Barclays and Standard Chartered are also in the red at the time of writing as financials are also experiencing some downside. Intertek Group is leading a list of the gainers and up by almost 2.5% on the day. Whitbread, Johnson Matthey and Hikma Pharmaceuticals are also all rising by more than 1%. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29595

    XTB Market Talk 21st December 2016
    By XTB Research team

    Trading suspended in Banca Monte dei Paschi
    Shares in the oldest bank in the world have been halted from trading in Milan this morning after Banca Monte dei Paschi’s stock plummeted by 17% following a new warning over its funding woes. Banking stocks throughout Europe have been hit with a wave of selling on the back of this news but overall major benchmarks are little changed with the FTSE 100 only marginally lower by 5 points. The pound is coming under some pressure this morning and is currently lower against all its major peers.

    Italian banks remain a cause for concern
    News of problems with banks in Italy isn’t a fresh concern with several lenders having struggled for a long time now. The latest development regarding Banca Monte dei Paschi still comes as something of an unexpected shock though, with shareholders having hoped that the worst of it was behind them. The European Central Bank has set a deadline of the end of the year for the bank to raise $5bn from investors and this morning’s statement that the lender would run out of money within four months unless recapitalisation efforts were successful has triggered the latest spate of selling. With Barclays stock lower by just over half a percent it is tempting to attribute the decline due to the news out of Italy, but with Lloyds pretty much flat on the day and RBS showing a notable gain there doesn’t appear to be any sector wide weakness for UK banks today. Mining stocks on the whole are showing some weakness though with Rio Tinto and Anglo American both off by over a percent.

    Holidays are coming
    The best performing stock on the FTSE 100 is Coca-Cola HBC with the share price gaining more than 1% in early trade. Coca-Cola has long been associated with Christmas time and whilst the myth that Father Christmas wears red due to the drinks company is actually not true, the advertising of the firm from the 1930s onwards has played a significant role in shaping the big, jolly Santa character we know today. Randgold Resources is also enjoying a strong up day as the stock looks to end a roller coaster year with a climb.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29463

    XTB Market Talk 20th December 2016
    By XTB Research team

    BoJ sends Nikkei to 2016 high
    Japanese stocks have rallied to their highest level of the year during the Asian session following the Bank of Japan meeting overnight which saw the central bank maintain their dovish rhetoric despite a recent sharp drop in the Yen. However this has failed to provide any significant moves higher for the UK stock market with the FTSE 100 seemingly already in holiday mode and lower by 9 points but remaining above the big psychological level of 7000. The pound is little changed on the day, with the only substantial move against a major pair being the rise against the Yen that is more down to weakness in the Japanese currency.

    Housebuilders look to rise into year-end
    The best performing stock on the FTSE 100 so far today is Barratt Developments, with shares in the homebuilder rising by approximately 1.5%. It has been a challenging six months for the firm with the shock outcome of the Brexit vote seeing large scale selling in the stock, but investors will hope that after the initial panic price has found some support and could look to end the year on the front foot. Taylor Wimpey is also enjoying a fair size gain this Tuesday, rising by 0.6% so far. Banking shares have experienced volatile trade in recent weeks with fears surrounding the solvency of their Italian counterparts seeing wild swings in London due to contagion fears. Disaster has been averted thus far and Lloyds, Barclays and RBS are all seeking to continue their recent rally which comes as a welcome relief following a tough year for shareholders.

    Gold stocks lose their shine
    After a stellar performance in the first half of the year, Fresnillo and Randgold Resources have seen some selling in recent months and both are continuing lower today with the former residing at the bottom of the FTSE 100. A global push higher in yields, which began stateside following Trump’s victory shows little signs of ending anytime soon and this makes non-yielding assets such as gold relatively less attractive. The Pharmaceuticals sector is seeing some mixed performance this morning with AstraZeneca and Johnson Matthey performing well, whilst Hikma Pharmaceuticals is selling off.

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29295

    XTB Market Talk 16th December 2016
    By XTB Research team

    FTSE back at 7000
    The rally seen in global stock markets Since Trump’s victory in the US elections shows little sign of slowing up with the FTSE 100 having traded back above the 7000 level this morning. The pound is little changed on the day and has experienced a fairly quiet week, seeing notable gains against the Japanese Yen but falling lower against the US dollar.

    Santa rally to push UK stocks to record highs?
    With the FTSE 100 now trading only a little more than 1 percent off its all-time high, bulls will be hoping to keep the recent rally going into the year end. A seasonality effect called the Santa rally shows that stocks have historically often risen during the period between Christmas and New Year’s Eve – and not for the month of December as a whole as many often erroneously point out – and given the recent momentum there’s a strong case to be made for record highs to be seen before 2016 is out. The year has presented several possible reasons for the current bull market to end, but with only two weeks left stocks continue to rally and having dodged numerous bullets – with the most recent being the seemingly negative outcome of the Italian referendum – there is little to suggest we’ll see a correction anytime soon.

    Old Mutual leads the gainers
    The best performing stock on the FTSE 100 this morning is Old Mutual, which has risen by a little over 2%. After fairly steep declines seen in the middle of the week, the bank has recouped the losses and is looking to end Friday near its recent highs. Shares in Standard Chartered are also enjoying a day in the green, whilst a move off the lows in the price of Gold bullion has provided a bounce for Randgold Resources. Overall the FTSE 100 is marginally higher by 3 points at the time of writing, with Dixons Carphone countering some of the risers by continuing to fall after releasing a disappointing outlook in the retailer’s latest earnings earlier this week.

    Light economic calendar into year end
    This week has contained several major events that have been driving markets with the first coming before the open after a deal amongst non-OPEC producers to join the members with the organisation in cutting production saw the oil price rise to its highest level of the year. The 25 basis point increase in the Fed Funds Rate announced by the FOMC on Wednesday has added more fuel to the US dollar’s recent ascent, whilst weighing on bonds and many commodities. The Bank of England meeting was a bit of a non-event yesterday and looking forward to next week there’s not much by the way of scheduled releases that have the potential to alter the current trends in many financial markets. Having said that, there is the potential for year-end flows in the coming weeks as money managers seek to mark up their book before the 30th December and this could cause some unexpected moves. It’s also worth bearing in mind that given the recent strong moves there could be some profit taking around the corner, however until there are clear reversal signals for stocks, oil, the US dollar or Treasury yields the trend remains very much in an upwards trajectory. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29214

    XTB Market Talk 15th December 2016
    By XTB Research team

    US hike rates for first time in 2016
    Markets are relatively quiet this morning after the decision by the US central bank to raise interest rates last night saw the US dollar continue its recent rise, while stock markets threaten to end their latest ascent. As the attention now turns to the Bank of England who announce their latest policy at midday, the FTSE 100 is lower by 9 points and the pound little changed.

    FOMC: better late than never
    After increasing the Federal Funds Rate for the first time in almost a decade last December, the FOMC hinted at four further rate hikes during 2016. Due to certain circumstances leading to a myriad of excuses for not hiking, the final meeting of the year finally saw another rate rise which was by then widely expected by the markets. Slight upward revisions to the economic projections and an unusually hawkish Yellen have added more fuel to the moves in FX and the fixed income space since the US election, with US ten-year yields and the US dollar both continuing their upward trajectory. However the moves in the stock market are not so clear and whilst it remains close to its all-time high and within striking distance of the big 20,000 level, the Dow Jones Industrial Average didn’t take the news too well and posted its largest decline since before the election. The focus now shifts to the Bank of England who meet at midday, and whilst a change in rates in London is highly unexpected the accompanying statement could be of interest with the potential for a more Hawkish shift arising due to growing inflationary pressures in the UK economy.

    Gold continues to plunge
    The price of Gold bullion took another leg lower in light of the Fed hike and the precious metal now sits nearly $200/oz lower than it did on the election night. This drop has been sorely felt in Fresnillo and Randgold Resources, with the two worst performing shares on the FTSE 100 off by 8.9% and 7.0% respectively. The rising dollar has also weighed on mining stocks with BHP Billiton, Glencore and Rio Tinto all seeing some early selling pressure. Despite the sizeable selling in these stocks the benchmark as a whole is holding up fairly well, largely thanks to a resurgence in banking stocks with Barclays, RBS and Lloyds all building on their recent gains.

    Yahoo suffers second data breach
    Shares in Yahoo have seen some selling in the pre-market since news has broke that the tech company has had more than a billion user accounts affected in a hacking attack dating back to 2013. The news comes as a worrying development in security terms after the internet giant announced as recently as September that it suffered a 2014 breach, in which 500 million accounts were accessed. Whilst the incidents are not believed to be related, the close proximity to which they have been made public may cause concern for shareholders who have overall enjoyed a pleasing performance throughout 2016.

    There is some speculation that the latest hacking scandal could be state-sponsored, however there is no evidence as of yet to support this theory – the previous attack in 2014 was also believed by the firm to be an act that was sponsored by a state. The news comes at a bad time for the firm, with Verizon currently proposing a $4.8bn acquisition of Yahoo and these events may see the US mobile carrier modify or even abandon its bid. A consumer backlash against the firm due to another security breach, which makes the prior one not seem like an isolated event, could cause Verizon to value Yahoo less favourably.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29117

    XTB Market Talk 14th December 2016
    By XTB Research team

    Mixed signals on the UK labour market

    The latest data on the labour market was released this morning with the number of people in employment falling for the first time in more than a year, but there were some positives. Average earnings rose and the claimant count also fell more than expected in positive signs that will likely dampen some of the negativity around the headline release. Both the FTSE 100 and pound are slightly softer in early trade with both markets paring recent gains as we look ahead to two major events later on today.

    UK employment declines but no need to panic yet
    The three months through October saw UK employment fall for the first time in more than a year, and whilst this is clearly not a positive development it isn’t necessarily a major warning sign on its own. A fall in the number of people in work of 6,000 to 31.76 million has attracted some headlines but several other employment metrics remain strong. The number of people claiming unemployment related benefits during the month of November increased by 2,400 – substantially below the increase of 13,300 seen in October, and also below the consensus forecast for a 6,200 rise. Furthermore workers will be pleased to see that average earnings rose by the most in a year, which will go some way to softening the blow of a rising inflationary environment.

    Dixons Carphone weighs on UK stock benchmarks
    The worst performing stock on the FTSE 100 this morning is Dixons Carphone, with the retailer seeing its stock slump by almost 5% despite posting a respectable set of results. The latest earnings show a 19% rise in headline profit before tax as well as market share increasing across all markets in the 26 weeks ended October 29th.

    Having said that, the shock from the Brexit vote is still evident in the firm’s share price, and whilst it has recovered somewhat from the low seen in the weeks that followed the event, it will likely remain a headwind going forward. it’s been a challenging year for shareholders in the retailer and despite some improvement in recent months the market cap still remains around a fifth lower than it did at the start of 2016.

    Whilst retail sales figures have been robust since the referendum, this positive is more than outweighed by several adverse effects that have occurred due to the Brexit vote. Big-ticket electrical purchases from non-UK producers are expected to see margins squeezed – largely due to a fall in the pound – whilst higher inflation may also lead to rising wages. Overall this report contains several positives but shareholders should be under no illusions that it signals a drastic turnaround in their fortunes, with several headwinds set to persist in the foreseeable future.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #29058

    XTB Market Talk 13th December 2016
    By XTB Research team

    UK Inflation rises to two-year high
    The most widely-viewed inflation metric for the UK rose to its highest level in more than two years in November, with this morning’s release pushing the pound higher and back above the 1.27 handle against the US dollar. The FTSE 100 is also showing some small gains in early trade after a negative start to the week yesterday.

    Prices rise on clothing and gasoline increases
    A 1.2% rise in the Consumer Price Index (CPI) in November marks the highest level for this economic release since October 2014 and shows growing inflationary pressures in the UK economy. This rise will almost certainly be a major talking point during the upcoming Bank of England (BoE) meeting later this week, with increasing inflation providing a possible reason against the further easing of monetary policy. It is unlikely there will be a material impact on rates just yet, but with a 3-month moving average for this metric now over 1% the fall in the pound and stimulus measures announced in August are clearly contributing to higher prices. If this trend persists, it could lead to a more hawkish stance amongst the rate-setting committee of the BoE. The market reaction is suggestive of this with the pound higher against all its major peers today and even managing to outperform a Trump-inspired US dollar last month.

    Airlines recover after losing altitude
    Shares in International Consolidated Airlines and easyJet have recouped most of Monday’s declines this morning after they began the week under pressure from the price of oil rising to its highest level of the year. UK banking stocks remain sensitive to the developments of their Italian counterparts and they are enjoying a move higher today as they look to ride the coattails of Unicredit, which has surged up by more than 7% after announcing job cuts and plans to raise fresh capital. The Italian lender has endured a torrid time of late and the latest action appears a last-ditch attempt to stave off a government rescue, with the strategy likely to be ultimately decided by how successful the firm raises the target of 13bn Euros.

    Carpetright falls on weak results
    It’s been a disappointing second half of the year for Carpetright, with results for the retailer showing a 3.8% fall in revenue and this morning’s release has been met with a drop in excess of 4% in the stock. In addition a 42% drop in profit before tax is largely due to the substantial headwinds of the weaker pound, but softer market confidence and poorly performing stores have also played their part. The crux of this loss is focused in the UK, where operating profit dropped a whopping 48.9% and this is a particularly damaging body blow when you consider it is in the UK where Carpetright generates 84% of its total revenue.

    The only positive from this report is the upswing in like for like sales of +2.6% in the six weeks to 10th December, which paints a different story to the previous six months. However, we are yet to learn how much of this sales improvement was driven by price cuts and sales offers, which could ultimately hurt margins once more. So I treat this improvement with a hefty pinch of salt.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #28969

    XTB Market Talk 12th December 2016
    By XTB Research team

    Further cuts send the oil price to 2016 high
    Non-OPEC members have joined their counterparts within the organisation in agreeing on a deal to cut production in an attempt to support the oil price. Brent crude futures – an international benchmark for the price of oil – have responded positively to the news, rising around 5% since last night’s open and in doing so posting a new 2016 high. The FTSE 100 is little changed on the day whilst the pound is trading slightly softer, with the buoyant oil price seeing the Canadian Dollar as the greatest beneficiary and rising by more than 2% against it.

    Collaboration amongst oil producers sends oil soaring higher
    The first pact in 15 years between OPEC and non-OPEC countries to reduce production has seen the oil price continue its recent rally and break higher to trade its highest level of the year this morning. The bulls have been firmly in control of the market since a deal was struck amongst OPEC members at the end of last month, and with that deal being contingent on non-OPEC countries participating in reducing output, the announcement of a 558k barrels a day reduction for non-OPEC comes near the top of the expected range and has seemingly rubber-stamped the agreement. However, before bulls get too carried away and expect a strong move higher towards $100 a barrel it is worth noting that there are little by the way of checks in place to ensure each individual country maintains their agree level of production, and the incentive to cheat on the agreement is strong. With Saudi Arabia seemingly throwing in the towel in their strategy of flooding the market with oil to suppress the price and take higher-cost producers such as US shale out the market, it now appears that all oil-producing nations would like higher prices. However from an individual perspective all countries would prefer to not have to cut their own output and therefore be able maximise their profits from higher prices and this may lead to some choosing to exceed their quota. If a country is caught exceeding its quota then others may feel let down and also choose to ramp up production and this could lead to a return of excess supply.

    Oil majors the biggest gainers on the FTSE

    Rather unsurprisingly the best-performing stocks on the FTSE 100 this morning come from the oil & gas sector, with Royal Dutch Shell and BP both rising due to the latest leg higher in the price of oil. What is quite unexpected is that less than 15 companies are higher on the day, which is unusual given the broader index is little changed and lower by only 8 points at the time of writing. Consumers of oil suffer when prices rise, and this can be seen in International Consolidated Airlines and easyJet both losing ground on the day. The yield on US government debt has continued its rise since the presidential election and this has had a major negative impact on the price of non-yielding assets such as Gold. With futures on the precious metal falling to their lowest levels since early February shares that are positively correlated with the price of bullion are under pressure, with Randgold Resources and Fresnillo amongst the worst performers on the UK blue-chip index. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #28912

    XTB Market Talk 9th December 2016
    By XTB Research team

    FTSE on track for best week since June
    The FTSE 100 is trading marginally higher on the day as the index consolidates on impressive weekly gains that would mark the biggest rise since the week after the EU referendum. The rise in the benchmark is largely due to swathes of positive sentiment flowing across the channel with the fall in the pound since Monday adding a further boost.

    European rally raises UK stocks
    The week began with stock markets in the red after Sunday’s Italian referendum threatened to derail the Trump rally. However this pessimism was short-lived and with the Eurostoxx and German Dax both hitting year to date highs on Thursday, the FTSE has been lifted to trade back near the 7000 level. Yesterday’s announcement of a 9-month expansion to the ECB’s current Asset Purchase Program has provided more festive cheer to bulls. The rally seen this year is a good example of a bull market climbing a wall of worry, with several potential causes for a major correction failing to see a sustained period of lower prices. With concerns surrounding a Chinese hard landing, the EU referendum, the shock outcome of the US elections and ongoing potential for political carnage in the Eurozone, there has been many reasons for markets to plummet in 2016 – but as we head into the final few weeks of the year, benchmarks in Tokyo, Frankfurt, London and New York reside close to their annual highs.

    Sterling pares gains
    After a very strong rise in November that saw the pound usurp even the Trump-inspired US dollar to be the best performing of all major currencies for the month, December has begun with some mild selling in sterling. Whilst the currency hasn’t depreciated substantially it is lower against all its major crosses with the Canadian dollar the biggest beneficiary as the Loonie has risen due to a slightly hawkish BoC meeting and ongoing resilience in the oil price. The latest economic data for the UK serves as a warning sign that the ongoing indecision surrounding Brexit could become an increasingly bigger problem with industrial and manufacturing figures both contracting. Yesterday saw the legal challenge regarding whether the government needs Parliament’s authorisation to trigger Article 50 draw to a close and the president of the Supreme Court has promised a decision as as soon as possible.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #28857

    XTB Market Talk 8th December 2016
    By XTB Research team

    Focus on the ECB
    One of the main events of the month comes this afternoon from Frankfurt as the European Central Bank (ECB) concludes its final policy meeting of the year. With expectations high for an extension of the current asset purchase programme, there is plenty of room to disappoint, especially given the recent steep run up seen in stock markets. Heading into the meeting the FTSE 100 is little changed after yesterday the index posted its biggest rise in almost a month, whilst the pound is recouping some of the losses seen this week in early trade.

    Taper to overshadow QE extension?
    With the current stimulus package being used by the ECB in an attempt to reflate the Eurozone economy set to expire in March 2017, and inflation still running below target levels, many expect the central bank to announce an extension later today. Quantitative easing has historically been seen as positive for stock markets and a downward force on the currency, as the bond buying programme suppresses yields making stocks relatively more attractive and the currency relatively less so. Along these lines an extension should therefore be Euro negative and provide a boost to stocks. However, the market reaction may not be quite so straightforward and as is often the case with central bank policy the future intentions may have a greater impact on the market than current policy. This is where any taper talk may usurp a QE extension.

    Does Draghi risk Taper tantrum II?
    Back in 2013 when then Fed chair Ben Bernanke announced that the US would be reducing their asset purchases, the market threw its toys out the pram with large scale sell-offs seen in bonds and the stock market. Whilst the situation in the Eurozone is different in many respects, a market that has grown accustomed to unprecedented levels of central bank support may react to plans for its eventual withdrawal in a similar manner to a toddler who’s lost their dummy. With bond markets around the globe tumbling in the past month since Donald Trump’s election victory, many are starting to question whether the bull market that has lasted for over 30 years is set to end. Any mention of “taper” in President Draghi’s press conference could provide another blow to bond market Bulls who are rightly worried that their long winning run could be coming to an end.

    Sports Direct report sharp fall in earnings
    The latest earnings report from Sports Direct makes pretty grim viewing at first glance and the share price has fallen by a little over 2% in early trade. Having said that, with the stock off by more than 50% in the past year there’s only so many times the same bad news can be discounted and with the current price showing the firm in an attractive light by many fundamental valuation metrics, bargain hunters may begin to look to cautiously enter.

    Group revenue continues to rise on a currency neutral basis, but let’s not forget the retailer took a £15m hit on the flash crash in the pound in an unexpected and unwanted shock back in October. The worst parts of the report come from the falling earnings with group EBITDA dropping by around a third and underlying profit before tax lower by 57%.

    CEO Mike Ashley admits the last six months have been tough, but his comments suggest a belief that a couple of the adverse developments on the business have been one-off in nature (fall in the pound, bad PR from MPs inquiry) and that better times lie ahead. A medium to long-term goal to turn the business into the “Selfridges” of sports retail sounds overly ambitious at this current point, but it could ultimately see a move away from budget products to become more of a high-end retailer which presents the opportunity for greater margins in the long run. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #28802

    XTB Market Talk 7th December 2016
    By XTB Research team

    Unexpected fall in UK economic indicators
    This morning saw a substantial drop in both the manufacturing production and industrial production in the UK for the month of October which comes as a timely reminder that the economy remains vulnerable. The pound ended its recent rise against the US dollar yesterday after hitting a 2-month high, and is falling across the board this morning since the data was released. The FTSE 100 is having no such problems though and has smashed back through the 6800 level to trade higher by more than 80 points on the day.

    Industrial production falls by the most in 4 years
    The latest month on month change in the UK’s industrial production shows the biggest contraction since November 2012 and in marking a third successive negative print the indicator is becoming an increasingly worrying warning sign on the health of the economy. At the same time the manufacturing production figure was also poor and whilst the drop of 0.9% is smaller in size than the industrial production equivalent (which was -1.3%) it reinforces the point that the economy isn’t performing well. The data on the whole since the EU referendum has been fairly positive but whilst surveys of purchasing managers are more widely viewed than the production figures, they perhaps represent a fairer reflection of economic output.

    FTSE rallies towards November high
    Despite these concerns surrounding the strength of the UK economy the FTSE 100 has rallied strongly this morning, in a good example of how the benchmark is a poor reflection of the nation’s real economy and instead is more driven by movements in the pound and external forces – such as the strong rally in European equities seen since Monday’s weak open. Leading the charge higher are mining stocks which operate overseas but report in London and banks that are receiving a continued boost from the absence of a catastrophe in their Italian equivalents for the time being. Rio Tinto is the best performer on the index and higher by more than 4% after the reiteration of a buy recommendation from Jefferies International, with Antofagasta Holdings and Anglo American enjoying a ride higher on its coattails. Standard Chartered, RBS and HSBC are also firmly in the green as market chatter that Monte dei Paschi is on the verge of being bailed out by the government has been warmly received. ​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

  • #28740

    XTB Market Talk 6th December 2016
    By XTB Research team

    Pound rises to two-month high
    This morning has seen the pound rise to its highest level against the US dollar since early October, with the market now not far from seeing a 1.28 handle again. The FTSE 100 is little changed on the day and remains range bound.

    UK Retail sales continue to rise
    According to figures from the British Retail Consortium (BRC), UK retail sales growth slowed in November, but there is still much to suggest that consumers are continuing their recent strong consumption habits which has been one of the brightest spots of the economy since Britain’s EU referendum. Despite a 1.3% year-on-year increase in total spending being significantly lower than October’s 2.4% equivalent rise, it still represents a reading that is stronger than the average for 2016 and part of the decline can be explained away by shoppers delaying purchases until the “Black Friday” sale which in itself offers big discounts and therefore could further reduce total spend.

    Separate figures from Barclaycard which cover the four weeks to 19th November showed rapid growth in overall consumer spending, rising 5.1% on a year earlier and coming in at the second fastest growth rate since October 2011. The data from BRC also didn’t include fuel, with prices at the pump rising to their highest of the year so far recently and potentially set for further increases in light of the surging oil price since OPEC finalised its production freeze deal.

    UK stock indices broadly flat
    The FTSE 100 is trading lower by 5 points this morning with HSBC and RBS topping a list of the gainers as banking shares continue their bright start to the week. Mining shares are the worst performing on the index with Anglo American, BHP Billiton and Glencore all seeing notable declines. The biggest movers on the day have come from the mid-caps with spread-betting firms IG Group and CMC Markets seeing their valuation plummet by more than a quarter after the FCA announced more stringent regulation in the sector. Measures such as reduced leverage for inexperienced retail clients – as defined by having less than 12 months experience in the market – and a ban on providers using any form of account opening offer have been announced, but it should be noted that a consultation on the plans remains open until March. The reaction in the stock price suggests this ruling has come as a major surprise but the increased offering of products such as binary bets which have characteristics more akin to gambling and the findings that 82% of clients have lost money suggests that more stringent regulation was inevitable.

    Slip-up for Topps Tiles
    Topps Tiles’ share price has slipped this morning after the firm admitted an error in last week’s annual results. The stock had risen after the flooring retailer announced that like-for-like sales had increased by 0.8% in the first 8 weeks of its fiscal year, but yesterday the business was forced to backtrack and state that the widely viewed performance metric had in fact fallen 0.3%. Whilst the revision to this number isn’t catastrophic in its nature and represents a mere adjustment in the grand scheme of things it will come as another unwanted piece of news to shareholders who have endured a torrid 12 months, which has seen almost half the firm’s value wiped off.

    News that money manager Blackrock (one of the biggest holders of shares in Topps Tiles) has offloaded over 3 million shares over the past week highlights a lack of confidence in the firm and whilst it maintains a core position of around 9% of the float the action suggests that they believe further downside could be in store. CEO Matthew Williams has moved swiftly to allay shareholders concerns in stating that the company is well placed for further progress in the coming year, and the early reaction in the stock price – with shares around 1.5% lower on the day – suggests the market has taken this latest development with mild disappointment rather than anything major that could cause panic-selling.​

    Note for traders:
    This analysis is intended to provide general information and does not constitute the provision of INVESTMENT ADVICE. Contracts for Difference (“CFDs”) are leveraged products and carry a high level of risk to your capital as prices may move rapidly against you. Losses can exceed your deposits and you may be required to make further payments. These products may not be suitable for all clients therefore ensure you understand the risks and seek independent advice.

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