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Dow Pares Losses Following Worst Christmas Eve Ever - EMEA Brief 27 Dec

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  • The three main American indices: the Dow, the S&P and the NASDAQ all rose over 4% on boxing day following the Dow’s worst Christmas eve ever.
  • Asian markets followed the trend with the Nikkei also raising 4%
  • Oil saw its largest daily gain since 2016 with an 8% rally. Oil related companies in Australia also climbed on the price increase.
  • The dollar basket rose almost 0.6% in the main session but finished the day with a strong gain of 0.29%
  • Huawei concerns deepen as the UK Defence Secretary states the firms’ involvement in the UK’s network upgrades should be reviewed. This follows an announcement earlier in the week that Huawei’s hardware is to be removed from UK emergency services.
  • UK business confidence is at its lowest since the Brexit vote according to a poll by the Institute of Directors which showed a negative outlook by 57% of directors.
  • US consumer confidence released today could highlight the public perception on the ongoing trade war with China, the Fed rate hike and the Huawei tribulations. 
  • Gold is sitting near its 6 month high as market volatility pushes people towards the safe haven asset.

UK, US and Europe: The Trump administration has assured markets that the head of the Fed, Jerome Powell will not be fired following this month’s rate hike. However, Trump has made it clear that he believes rates are being raised too fast, causing this recent volatility and contributing to the Dow’s worst Christmas eve. Meanwhile, the partial government shutdown has continued with Trump stating it will be sustained until a deal on the border wall is made.

Large end of year FX swap rates: Please be aware that due to year end market factors we are seeing significant moves in the funding rates for most FX pairs. This has been observed across the market, although some pairs are looking to be worse affected than others (most notably if you are short US dollars). These factors include financial institutions balancing their books before the end of the year, putting a strain on certain currencies. Read more...

Economic calendar - key events and forecast (times in GMT)

Economic Calendar 27.12 .PNG

Source: Daily FX Economic Calendar

Corporate News

  • Head of Tesla, Elon Musk has announced they are looking at setting up supercharger coverage in Africa in 2020.
  • Huawei have announced they expect revenue to reach $109 Billion fror 2018, a 21% increase YoY.
  • Vinci are set to buy a 50.01% stake of London Gatwick for £2.9 Billion

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Information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary

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