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Showing content with the highest reputation since 15/06/18 in Blog Entries

  1. 5 points
    What is the EOM indicator? An indicator that highlights the relationship between price and volume and is particularly useful when assessing the strength of a trend. As implied by its name, it is used to measure the ease of movement in price. It is a volume-based oscillator that fluctuates above and below the zero line. In general, when the oscillator is above zero, the price is advancing with relative ease. When the indicator is below zero, the prices are declining with relative ease. A wide range (difference between highs and lows) on low volume implies that price movement was relatively easy, as it did not take much volume to move prices. Alternatively, a small range and large volume indicates that price movement was difficult as there was a relatively small price movement on high volumes. Other important things to remember with EOM The closer the EMV line is to zero, the less ease of movement on that specific period. The bigger the spike in the EMV line, the more ease of price movement, either positive (if above the zero line) or negative (if below the zero line). The ease of movement indicator can also be used as an average, by adding together various single-period ease of movements and dividing them by the number of periods being considered. By smoothing out the indicator over time it can be used to identify trends and areas of convergence/divergence. A graphic example Let’s review the EOM indicator by using it in a real-life example which took place at the beginning of Dec ‘18. Using the Wall Street 30 min chart we can see a correlation between the EOM indicator and subsequent market movements at the opening of the session on Monday. Looking at the chart below you can see there is a positive spike in the EOM line which holds for a few periods before it starts declining. The cause for the spike is likely to have been the bullish (but cautious) reaction to a ceasefire between the US and China on trade tariffs. This could have meant that traders were holding Wall Street pushing the price higher, however maybe not as many people bought into the rally, therefore creating a big range on low volume. To summarise: After the initial positive reaction from the markets, traders could have become more sceptic about the viability of the ceasefire, and therefore a more bearish reaction comes in to play. This increases the range as lower lows appear maintaining the EOM at a high level. As more and more traders become sceptic, highs become lower, decreasing the range, which paired with a stable volume results in a declining EOM line. As you can see from the graph, the EOM line reacts before the actual price does, as a tightening range indicates that investors are becoming more bearish, which can eventually lead to a decline in price if it sustained over a period.
  2. 5 points
    I'm happy to announce that you can now add drawings to the indicator study area both on desktop and mobile of the IG charts. This new functionality has been developed on the back of client feedback submitted to Community, from within the dealing platform, and directly with our Trading Services and client facing teams. If you have any other requests, please add them in the comment section below and we'll make sure the charting dev team and product owners see them. You can now draw on indicators For instance, get more insight from your RSI indicator by drawing a trendline directly on the study area. The ability to draw on these indicators, such as MACD and volume, opens up a number of new options for technical analysis. Trends, for example, can add granular insight into market dynamics and can help improve the accuracy of your TA and strategy. But that's not all... We also; added the measure tool to the mobile charts and made it persistent on your screen so that it does not disappear when you tap or click away. improved the usability of the charts so that you cannot move your drawings by mistake when moving your charts sideways. To move a drawing, you would need to explicitly select it first. improved the general rendering performance of these drawings. Coming very soon! we've added the option to activate or deactivate the snapping on the candles. This should be rolled out around mid October. All the best and happy trading IG Community Moderator Team
  3. 4 points
    Trade War Relief, But How Much? Finally, some trade war respite. Or at least, what looks like relief. Following week after week of steadily escalating threats and a few decisive actions (and retaliations) along the way, there was finally a joint statement of agreement between key global leaders. Following their meeting in Washington DC, US President Donald Trump and European Union President Jean Claude-Juncker issued a statement of success this past Wednesday. Any pause in this quickly ballooning threat to the global economic and financial order is welcome, but that doesn’t mean we should accept the event at face value. Did this summit result in a legitimate course correction for the growing destructive force was the press conference a political event designed to allow both leaders to claim a victory for their constituents? To evaluate that, we need to consider the terms. There was a commitment made by the EU to purchase more US-produced soybeans and natural gas. That seems encouraging at first blush, but pressing individual members to increase consumption is not reasonable. Vows to continue working towards solutions to the metals tariffs and avoiding tax on autos along with the suggestion that they would work together towards ‘zero tariffs’ is likely more enthusiasm than a plan of action. Not everything was a means to score political point. The agreement not to introduce new tariffs so long as they were negotiating is material as it curbs fear of an impending 20 percent tariff on European autos by the US and the $300 billion retaliation threatened by the EU. This glad-handing may be lacking for tangible action, but it can help curb fears of imminent escalation. That said, general capital market benchmarks – such as US equity indices – seemed little perturbed by actual progress in the economic fight these past few months. Let’s hope that aloofness and the fresh optimism holds moving forward, because this theme has not likely hit its crest. The largest threats have been made by the US against China. The Trump administration is likely putting tension on other fronts besides China as a means to amplify the leverage on this economic powerhouse. When the US eases back against developed world counterparts like EU, perhaps they expect those countries to ingratiate themselves to the US and head off critique for their handling of relationships with China. Don’t expect trade wars to truly be on the decline – much less resolved – with last week’s developments. Fed, BoE and BoJ Rate Decisions for Individual and Collective Influence The ECB rate decision this past week didn’t earn the Euro much in the way of productive volatility. Compare that to the speculation it drove – much to the central bank’s chagrin – throughout 2017. For many traders, that makes it an event to disregard. However, market participants would be wise to keep tabs on these fundamental themes for both their longer term influence on the target currency over the coming weeks and months; but it is arguably even more important to account for such events collective sway over more systemic matters like the inextricable link between global monetary policy and risk trends. It would be wise to consider these larger concerns through the week ahead as we wade into a run of central bank decisions. On tap, we have five large central bank rate decision, but only three of them are ‘majors’. The greatest weight will be hefted by the Federal Reserve. In monetary policy terms, everything about this meeting will be well fleshed out by speculators. Through exceptionally transparent forward guidance, we know the group expects to hike four times this year and that they have operated ‘on the quarters’. This meeting is out of sync for that trend. The real interest is the language used to either maintain path to a September rate hike or to start pulling back from it. Furthermore, there will be some degree of interest to see if the Fed replies to the President’s critique of policy and the currency – though that may be more appropriate for individual members’ reflections. Meanwhile, the Bank of England’s (BoE) Super Thursday meeting is expected to deliver a hike (77% chance according to swaps) and the Quarterly Inflation report. This is the most action-oriented event, but it will compete with Brexit for Sterling momentum and scaling up to global risk trends is not something this group’s policies have been capable of in this cycle. Finally, the Bank of Japan will no doubt keep its rates in place and the size of its stimulus program untouched. However, last week, reports surfaced that the group was discussing changing its stimulus approach to make it more ‘sustainable’. It is unclear exactly what that would entail, but given they are already at an extreme, it was read as a ‘hawkish’ shift. While these events can generate movement in their own currencies and local capital markets, do not underestimate the malleability of global risk trends under monetary policy. Years of excessive (extended well beyond the needs to stabilize growth and past the point of proving it would not readily translate into desired inflation) monetary policy has inflated market levels. It won’t be the wholesale withdrawal of stimulus across the board that will prompt sentiment rebalance but rather the anticipation normally associated to risk trends. FANG Has Set Up Apple as a More Important Capital Market Driver Earnings season has been mixed in the US thus far, but more important than the report of corporate numbers each trading session is the shift in bias surrounding these updates. There is considerable amount of ‘fudge’ room in reporting quarterly figures due to the dubious accounting allowances in GAAP (I obviously am not a fan). Yet, the details in questionable figures can be played up or played down depending on what the audience is willing to tolerate – or is actively seeking. With benchmark US indices struggling to regain the remarkably progress of 2017, sentiment has notably shifted towards earnings. No longer are the impressive elements of comprehensive reports amplified and the disappointing downplayed. The shortcomings are starting to be interpreted more readily in the general shortcomings that are more apparent in other areas of the economy. It is against this backdrop that we have had a troubled quarter from the concentrated speculative leader in the FANG. For those not familiar, it is an acronym of Facebook, Amazon, Netflix and Google – some of the largest and fasting growing market cap stocks in the world. The fact that they are also tech, which is the sector that has outperformed in US markets; and US equities which have outpaced most other liquid ‘risk’ benchmarks speaks to the concentration. As important as this group is, there support is starting to turn to borderline burden. Where Google and Amazon’s figures were positive (though they came with very clear caveats in fines and income), the Netflix and Facebook reporting were outright pained. The former dropped while the latter collapsed from record high to official bear market in a day. Given what the FANG represents, the market has paid closer attention to the state of earnings and perhaps the bias that has been applied here so consistently. How to settle a 50/50 split in the FANG updates and the plateau established in the group’s price indexing? Add an ‘A’. Due Tuesday after the bell, Apple’s earnings will tap into key US tech firms and it has its own innate amplitude as the world’s largest market cap stock. It will be important whether it beats or misses, but even more crucial is how the market treats a better or worse outcome than expected. This event can carry far more weight than just the immediate reaction for AAPL shares.
  4. 4 points
    So Much Risk, Status Quo is an Improvement In individual trading sessions or entire weeks where there is an overwhelming amount of important, scheduled event risk; we often find the market frozen with concern of imminent volatility. Even as a remarkable surprise prints on the docket early in the week, the impact it generates is often truncated by the concern that the subsequent release can generate just as much shock value but in the opposite direction. Many opportunities have been spoiled by such situations. Yet, what happens if we face the same situation on a grander scale? What if the threats are thematic, global and frequently lacking a specific time frame? We are facing just such a scenario now. The most troublesome subject is the unpredictable winds from the global trade wars. For influence, this is a systemic threat as the economic pain will inevitably come to a head. If we had an end date to work with, there would be a more decisive risk aversion, but it is the uncertainty of pacing that leaves the markets to drift with anxiety. Most critical updates in this ‘war’ have come out of the blue in the form of a tweet from US President Donald Trump. Add to this fully capable theme conflicting – though less capricious – matters, and there is just enough sense of opportunity in short-term efforts to keep bulls clinging to hope. Monetary policy, new and failing economic relationships, corporate earnings and more can fill in between shocks of new tariff threats. Though, if we came to a scenario of a universal dovish shift in central banks (or any other theme for that matter), would it be enough to offset the blight to global growth from trade wars? Not likely. Any Whiff of Fed Worry and a Dollar with Everything to Lose I weighed out my theory last week that Fed policy can only disappoint moving forward. That is not to say it can maintain a sense of status quo – it certainly can. However, the genuine opportunities for this central bank to ‘surprise in favor of the bulls’ is so improbable as to be impractical. It has already established a pace remarkably aggressive relative to counterparts. If conditions continue to support growth and optimism, it would lead other central banks onto a path to close the gap with the Fed. If economic and financial health floundered, the Fed would in turn have to ease its pace. This past week, the CPI data gave quantitative support for the status quo – though not any material Dollar lift. The Fed’s monetary policy update to Congress on the other hand laced its confidence on the economic outlook with modest concern over the fallout from trade wars while a separate report suggested the tax cuts would have less positive effect on the economy than previously anticipated. You can bet Fed Chairman Jerome Powell will have to address questions on both fronts when he testifies before the Senate Wednesday in the semi-annual Humphrey-Hawkins testimony. There are many Congressmen and –women from both parties who have called out the President’s aggressive position on trade as self-defeating. Powell will want to avoid triggering market fears (avoiding volatility is a third, unspoken mandate of the central bank), but the lawmakers will push the topic whether to illustrate the damage they fear or to earn political points. If he admits growth is at risk from the advance of trade wars, it would signal to the market that the pacing already baked in is less stable than what is presumed, and the passive premium behind the dollar may start to bleed off. China Data Run and Data Questions China is in a very difficult position. It is attempting to transition itself from methods of growth that are impossible to maintain over the long term without inadvertently causing disastrous instability. To successfully make this ‘evolution’ to an economy primarily supported by domestic consumption, stable capital markets and a wealthier population (rather than leveraged financing and questionable export policies), the government requires a remarkable amount of stability. The healthy risk appetite and moderate growth registered for the global economy over the past five years was the perfect environment upon which to pursue this effort. That is especially true because the Chinese data that already draws a fair amount of skepticism from the rest of the world would look like an unlikely idyllic steering for the economy – a pace that could be dubiously attributed to the general environment. Now, however, that gentle landing has been disrupted by the aggression from the United States. The drive to escalate trade wars threatens not just the important trade between to two countries, it risks pushing disbelief over China’s statistics to the breaking point. Though they would not likely show serious pressure in any area of the economy or financial system that they control, markets have grown adept at reading between the official lines when it comes to China. Spurring fears of a ‘hard landing’ for the world’s second largest economy could spur capital flight as foreign investors look to repatriate and nationals attempt to slip through controls to diversify their exposure. It should be said that if there is a crisis in China, it will spread to the rest of the world; but some may be happy if China were permanently put off the path to securing its position as the antipodean super power to the US. It is this big picture landscape that we must keep in mind as the important data of the coming week – China 2Q GDP, fixed investment, surveyed jobless rate, retail sales and foreign direct investment – crosses the wires with unsurprisingly little impact on the controlled USDCNH exchange rate. Any questions, just ask.John Kicklighter
  5. 4 points
    This blog post is to update everyone of the themes that DailyFX expects to focus on in the week ahead. Given the focus of previous weeks, the backdrop market conditions and the event risk ahead; the three topics below will be particularly important in our coverage. Risk trends amid trade wars If you somehow were in doubt that trade wars were already underway, the enactment of reciprocal $34 billion tariffs by the United States and China on each other this past week should banish that disbelief. For much of the world, the score is one whereby the US has triggered an opening import tax on the world’s second largest economy for what it perceives as intellectual property theft, and China has retaliated in kind. From the Trump administration’s perspective, the actions are a long overdue move to balance decades of unfair trade practices. Both feel they are reacting rather than instigating which gives both sides a sense of righteousness that can sustain escalating reprisals. Yet, as discussed previously, this is not the first move in the economic engagement. The United States’ metals tariffs was the first outright move that came without the pretense of operating through WTO channels. And, in a speculative market where the future is factored into current market price; the unilateral and extraordinary threats should be considered the actual start. The anticipation of a curb on global growth and capital flow very likely was a contributing factor to the stalled speculative reach and increased volatility over the past three months. Yet, markets have not collapsed under the fear of an economic stall with values pushing unreasonable heights. Perhaps this market simply needs to see the actual evidence of fallout before it starts moving to protect itself. This past week, the midnight cue for the tariffs notably didn’t send capital markets stumbling. In fact, the major US indices all advanced through Friday’s session. Blissful ignorance can last for ‘a little longer’, but blatant disregard for overt risks on a further reach for yield is hoping for too much. A Brexit breakthrough…to the next obstacle Heading into a full cabinet meeting this past Friday, headlines leveraged serious worries that UK Prime Minister Theresa May would find herself moving further into a corner on a split Brexit view from which she would no longer be able to escape a confidence vote checkmate. Yet, the reported rebel ministers that were pushing for a more stringent position on trade and market access in the divorce procedures seemingly relented. May was free to pursue a ‘free trade area for goods’ with close customs ties (though bank access would be restricted somewhat). From the market’s perspective, this is a tangible improvement in the general situation as it removes at least one level of ambiguity in a very complicated web. The foundation of ‘risk’ – as I’m fond to reiterate – is the uncertainty of future returns. If your investment is 95% likely to yield a given return, there is little risk involved. On the other hand, if that return is only 10% (regardless of how large it may be) there is a high risk associated. The same evaluation of this amorphous event applies. With the UK government on the same page in its return to the negotiation table, there is measurably less uncertainty. That said, this was only an agreement from one side of the discussion; and the EU has little incentive to give particularly favorable terms which would encourage other members to start their own withdrawal procedures. Furthermore, there is still a considerable range of issues for which the government and parliament are still at odds. If you are interested in the Pound, consider what is feasible for any bullish exposure with the cloud cover of uncertainty edging down from 100% to 90%. Fed monetary policy can only disappoint from here We don’t have a FOMC meeting scheduled for this coming week; but in some ways, what is on the docket may have greater sway over monetary policy speculation. The US central bank has maintained a policy of extreme transparency, going so far as to nourish speculation for rate hikes through their own forecasts and falling just short of pre-committing. They cannot pre-commit to a definitive path for policy because they must maintain the ability to respond to sudden changes in the economic and financial backdrop. And, making a sudden change from a vowed move will trigger the exact volatility the policy authority is committed to avoiding. Yet, how significant is the difference between an explicit vow on future monetary policy and a very heavy allusion in an effort at ‘transparency’. The markets adapt to the availability of evidence for our course and fill in with whatever gaps there are with speculation. This level of openness by the Fed sets a dangerous level of certainty in the markets. With that said, what is the course that we could feasibly take from here? Is it probable that the rate forecast continues to rise from here – further broadening the gap between the Fed and other central banks? That is what is likely necessary to earn the Dollar or US equities greater relative value given its current favorable standing isn’t earning further gains. More likely, the outlook for the Fed will cool whether that be due to the US closing in on its perceived neutral rate, economic conditions cooling amid trade wars or the increasing volatility of the financial markets jeopardizing onerous yields. Where the Dollar may have underperformed given the Fed’s policy drive in 2017, it still carries a premium which can deflate as their outlook fades. This puts the upcoming June US CPI reading and the Fed’s monetary policy update for Congress in a different light. All of this said, this is not the only fundamental theme at play when it comes to the Dollar. There is trade wars, reserve diversification and general risk trends. Interestingly enough, all of those carry the same skew when it comes to the potential for impact. Any questions, just ask. John Kicklighter
  6. 4 points
    A trading forum and help and support network for IG clients Over the last few months we have been working on a new layout for your Community, as well as adding greater functionality and new content areas. Today is the 'go live' date and we hope you like what you see. Have a browse, and if you have any feedback or suggestions please add a comment below. Maybe take this opportunity to make your first Community post if you haven't already? This purpose of this forum is for like-minded clients to share trade ideas and discuss market opportunities, ask questions, and provide help and support to others. Learn strategies and trade ideas from experienced traders Give tips to the Community and share your market knowledge Perfect your trading by discussing ideas with others Get the most out of IG and ask the Community anything regarding trading or IG Anyone can browse the trading forum, but you will need a live IG account to post or interact on Community. If you're new to Community and looking for a first step maybe check out the forum, or have a once over of our Community tutorials. We're also curious for any feedback you may have, so add a comment below to have your voice heard. We're always looking to improve our offering based on what traders want - so let us know! We migrated the old forum (and added some new features) We have migrated over all the posts, likes, 'kudos' and private messages from the previous version of the forum, as well as integrated the Community login with the wider IG eco system so you can enjoy a seamless digital experience between the platform and forum. You should be able to see all your previously posted content under the same Community username as you currently use. New content areas... Blogs: We have three blogs which we will be updated periodically. Market News - Daily morning briefings, index dividend adjustments, and one off articles IG Product Updates - A place to let you know about all the things we roll out IG Community Blog - Competitions, 'Ask the Expert' series, and Community updates Calendar: A way for discussion to be relevant and anchored to a specific date / time / macro event Our Picks: A hand picked showcase of the best IG Community has to offer. If individual client forum posts or comments get a significant number of upvotes then they may also be featured More to be rolled out shortly! ...and a few new features. Activity streams: If you're logged in you'll notice you can easily browse things such as 'unread' or 'followed' content. You can save individual search streams so they're available for the next time you log in Advanced search: An updated and intuitive search functionality Leaderboard: The Leaderboard keeps track of the hottest content and best users each day based on reputation received. You'll increase your chances of getting on here if you post more, receive more likes, and help others Community Profile: Your space in Community. Check yours out by clicking on your username in the top right hand corner Access IG Community - anytime, anywhere IG Community will be up 24 hours a day, 7 days a week. The easiest way to access IG Community is using the top right hand 'Help' drop down in the dealing platform, but you can also access via our mobile apps (look under the help and support section - try it now), or by simply going to community.ig.com This initial rollout is only phase one of 'the big Community plan', and we'd love to hear your feedback. What do you like? What would you change if you had the chance? What new areas would you like to see? Let us know using the comments section below. Happy chatting IG Community Moderator Team
  7. 2 points
    We've released options for the Volatility Index. You can find them on our platform under the options tab> Indices. Options, when buying the call/ put, are a great way to get involved in market movement whilst having limited risk. Dealing hours : 09:00:00 – 21:15:00 GMT Monday-Friday Contracts offered : Currently offer the next two months (November and December) Expiry for monthly options : Every 3rd Wednesday of the month Last trade : 21:15 GMT the day before expiry Settlement : Settled basis the Special Opening Quotation (SOQ) of VIX calculated by the opening prices of the SPX constituents used to calculate the VIX index on settlement date If you need any clarification on how options work, contact me through the community or give our help desk a call.
  8. 2 points
    I just wanted to update all Community members to let them know that we have recently reduced the minimum bet sizes on some key indices, commodities, and FX markets. This has been done for both UK spread betting accounts and European CFD accounts. What are the minimum bet sizes for indices, commodities and FX on IG? Correct as of 6th September 2018 but subject to change Continued feedback A key aim of Community is to keep a two way dialogue open between our client base and those on our trading services support team, core dealing and developer teams. The decision to reduce minimum bet sizes across these markets has in part been due to feedback received from a number of our clients and those on Community. A big thank you to those who have shared their thoughts on this over the last few weeks. Please feel free to continue to add feedback and suggestions on Community at any point. If you have any feedback on this specific change please feel free to add it below. All the best IG Community moderator team
  9. 2 points
    A trading forum and help and support network for IG clients The new IG Community has been live for a few weeks now and I just wanted to update all Community members on a couple of things, including a showcase of a brand new promotional video. This should be useful for those who haven't used Community before but what to know more - it's well worth a watch. If you have any comments or questions regarding the new forum please let us know in the Comments section below. We're always looking to improve our offering based on what traders want - so give us a shout! New features this month Guests can now post without necessarily needing to be logged into Community. We want to make sure that all content is still relevant and interesting, so all guest posts will have to be approved by a moderator before being publicly visible. We want to make sure that quality over quantity remains, however the recent trial seems to have gone well and the Community is getting more relevant posts to add to discussion. If anyone has any opinion on this we'd love to hear from you so please feel free to add a comment below. We recently had a trial of the new 'poll' feature on a post relating to new cryptocurrencies. You can read that article on which crypto your most interested in here. Currently only moderators can post polls, however if you as a client would like to have this function, let us know! We're interested in who would use it. We're now in the top navigation bar on IG.com - it may not sound like a big change, but it allows you to get to the forum very quickly from anywhere on the IG.com environment (look for the global black navigation bar at the top). We're also looking at inclusion in MyIG - that should be live shortly. Finally, we have some stats for you which you may find interesting. What is IG Community? This purpose of this forum is for like-minded clients to share trade ideas and discuss market opportunities, ask questions, and provide help and support to others. Learn strategies and trade ideas from experienced traders Give tips to the Community and share your market knowledge Perfect your trading by discussing ideas with others Get the most out of IG and ask the Community anything regarding trading or IG Anyone can browse the trading forum, but you will need to have an IG account to post or interact on Community and have your content published immediately. If you're new to the forumand looking for a first step maybe check out the forum, or have a once over of our Community tutorials. We migrated the old forum (and added some new features) We have migrated over all the posts, likes, 'kudos' and private messages from the previous version of the forum, as well as integrated the Community login with the wider IG eco system so you can enjoy a seamless digital experience between the trading platform and forum. You should be able to see all your previously posted content under the same Community username as you originally had on the previous iteration. New content areas... Blogs: We have three blogs which we will be updated periodically. Market News - Daily morning briefings, index dividend adjustments, and one off articles IG Product Updates - A place to let you know about all the things we roll out IG Community Blog - Competitions, 'Ask the Expert' series, and Community updates ...and a few new features. Activity streams: If you're logged in you'll notice you can easily browse things such as 'unread' or 'followed' content. You can save individual search streams so they're available for the next time you log in Advanced search: An updated and intuitive search functionality Leaderboard: The Leaderboard keeps track of the hottest content and best users each day based on reputation received. You'll increase your chances of getting on here if you post more, receive more likes, and help others Community Profile: Your space in Community. Check yours out by clicking on your username in the top right hand corner (logged in users only). Access IG Community - anytime, anywhere IG Community will be up 24 hours a day, 7 days a week. The easiest way to access IG Community is using the top right hand 'Help' drop down in the dealing platform, but you can also access via our mobile apps (look under the help and support section - try it now), or by simply going to community.ig.com. What do you like? What would you change if you had the chance? What new areas would you like to see? Let us know using the comments section below. Happy chatting IG Community Moderator Team
  10. 2 points
    If you like to change between different intervals on the IG desktop charts (from 1 minute candlesticks to 5 or 10 minute candles, or to hours, days or months) then we've just made it easier with keyboard shortcuts. Whilst on a chart you can type any number from 1 to 5 on your keyboard to bring up a small 'interval' dialogue box, confirm your choice, and hit enter. For example: 1 minute intervals: type 1 then enter 5 minute intervals: type 5 then enter 1 hour intervals: type 1 h then enter 2 hour intervals: type 2 h then enter 1 week intervals: type 1 w then enter See crosshair data on future dates You can now place your cursor/crosshair on a future date and see the level and time/date where you are positioned. Whilst this is a very minor update which could be seen as a trivial feature, it can become quite handy if you're looking at a trend and want to know exact levels and the time they will be reached. Simply position your cursor in the future and you’ll see the corresponding information straight away. If you have any questions or feedback on this, please feel free to share in the Comment section below.
  11. 2 points
    In a similar manner to our position preview feature you can now see your working order shaping up on the charts as you start creating orders from the ticket. Simply input your order direction, size and level and you will be able to see a preview on the chart. You can then decide to drag you Stop and/or Limit from the chart to define their absolute level and see the related Risk/Reward Ratio. Once you are happy with this just place your order from the ticket et voila! If you have any comments, feedback, or questions on this please add your thoughts to the comment section below. Client feedback is a driving force behind platform improvements and all suggestions are forwarded to the appropriate project management and product ownership teams. NB: You will need to make sure 'position preview' is on - you can toggle this by right clicking on the charts and navigating to 'show'.
  12. 2 points
    In the Aftermath of the Fed The baton has been dropped. The Federal Reserve was by far the most aggressive major central bank through this past financial epoch (the last decade) to embrace ‘normalization’ of its monetary policy following its extraordinary infusion of support through rate cuts and quantitative easing (QE). Over the past three years, the central bank has raised its benchmark rate range 225 basis points and slowly began to reverse the tide of its enormous balance sheet. As of the conclusion of this past week’s two-day FOMC policy meeting, we have seen the dual efforts to level out extreme accommodation all but abandoned. A more dovish shifted was heavily expected given the statement in January’s meeting, the rhetoric of individual members as well as the state of the global markets and economic forecasts. Yet, what was realized proved more aggressive than the consensus had accounted for. No change to the benchmark rates was fully assumed, but the median forecast among the members accounted for a faster drop than the market likely thought practical. From the 50 bps of tightening projected in the last update in December, the median dropped to no further increases in 2019 and only one hike over the subsequent two years. Over the past three years, the central bank has raised its benchmark rate range 225 basis points and slowly began to reverse the tide of its enormous balance sheet. The Dollar responded abruptly Wednesday evening with a sharp tumble, but there was notably a lack of follow through where it counted – the DXY Dollar Index wouldn’t go the next step to slip below its 200-day moving average and break a ten-month rising trend channel (a hold that confounded those trading an presumed EURUSD breakout). Why did the Greenback hold – for now – when the move was clearly a dovish shift? Likely because the market is already affording for an even more dovish forecast as Fed Fund futures have set the probability of a 25bps cut from the Fed before the end of the year as high as 45 percent. What’s more, if you intend to trade the Dollar; it is important to recognize that even with a more dovish path ahead, the Dollar and US assets will maintain a hearty advantage over its major counterparts. That would particularly be the case should other groups extend their dovish views to more actively explore deeper trenches of monetary policy. Looking beyond the Dollar’s take, however, there are far more important considerations for the global financial system and sentiment. The Fed was the pioneer of sorts for massive stimulus programs designed to recharge growth and revive battered markets. It was also the first to start pulling back the extreme safety net when its effectiveness was facing deserved scrutiny by even the most ardent disciple of the complacency-backed risk-on run. In other words, its course change carries significantly more weight than any of its peers. The question ‘why is the Fed easing back and so quickly’ is being posed consistently whereas in the past market participants would have just indulged in the speculative benefits. The overwhelming amount of headline fodder – from trade wars to frequency of volatility in the capital markets – makes for a ready list of considerations. Yet, the group’s own economic forecasts brought the reality home far more forcefully. Though we have seen numerous economic participants downgrade the growth outlook (economists, investors through markets, the IMF, etc), to see the median GDP forecast in the SEP (Summary of Economic Projections) lowered from 2.3 percent to 2.1 percent for 2019 made the circumstances explicit. We’ve considered multiple times over previous months what happens if the market’s start to question the capability of the world’s largest central banks to keep the peace and fight off any re-emergences of financial instability. Now it seems this concern is being contemplated by the market-at-large. That doesn’t bode well for our future. A Sudden Fixed Income Interest When ‘Recession’ Warnings Take Hold Except for fixed income traders and economists, the yield curve is rarely mentioned in polite trader conversation or in the mainstream financial media. Its implications are too wonky for most as it can be difficult to draw impact to the average traders’ portfolio and given the considerable time lag between its movements and capital market response. Yet, when it comes to its most popular signal – that of a possible recession signal – the structure of duration risk suddenly becomes as commonplace a talking point as NFPs. On Friday, the headlines were plastered with the news that the US Treasury yield curve had inverted along with a quick take interpretation that such an occasion has accompanied recessions in the past. There have actually been a few parts of the US government debt curve that have inverted at various points over the past months, but this occasion was trumpeted much more loudly as it happened in the comparison to the 10-year and 3-month spread (what has been identified as a recession warning even by some of the Fed branches themselves). First, what is a ‘curve’? It is the comparison of how much investors demand in return (yield) to lend to the government (for Treasuries specifically) for a certain amount of time. Normally, the longer you tie up your money to any investment, the greater the risk that something unfavorable could happen and thereby you expect a greater rate of return. When the markets demand more for a short-term investment than a longer-term one in the same asset, there is something amiss. When the markets demand more return from a three-month loan to the US government than a 10-year loan, it seems something is very wrong. Historically, the inversion of these two maturities has predated a number of us the recessions in the United States – most recently the slumps in 2008, 2001 and 1990. When the markets demand more return from a three-month loan to the US government than a 10-year loan, it seems something is very wrong. First is the lead period the curve reversal has to economic contraction. The signal can precede a downturn in growth by months and even years. Preparation is good, but moving too early can ‘leave money on the table’ for the cautious or accumulate some serious losses for those trying to trade some imminent panic. Further, there are certain distortions that we have altered the course in normal capital market tributaries that could be doing the same for Treasuries and therefore this reading. More recently, the revived threat of the US government shutdown through December and the unresolved debt ceiling debate put pressure on the asset class. At the same time, though, few believe the US would do little more than allow for a short-term financial shock in order to make a political point. Far more complicating for the market and the signal is the activity of the US and global central banks. The Federal Reserve has purchased trillions in medium-dated government debt as part of its QE program. They only started to slowly to reduce holdings and push longer dated yields back up a few years after they began raising short term rates in earnest. Their recent policy reversal only adds to the complication. Now, all of this does not mean that I believe the US and global economies will avoid stalling out or even contracting in the near future. Between the dependence on capital markets and stimulus, the heavy toll of trade wars and nationalistic policies, and the pain for key players in the global web; there is a high probability that we will see an economic retrenchment in the next few years. That said, that wouldn’t make this particular signal a trigger (causation) or even correlated through the main forces that would bring on a recession. Nevertheless, yelling ‘fire’ in an a panicky crowd on foggy day can still yield volatile results. Brexit, Just Winging It Another week and another upheaval in Brexit expectations. Through much of the past year’s anxiety over the withdrawal of the United Kingdom form the European Union, there was at least some comfort to be found in the finality of the Brexit date (March 29th, 2019). While it could end in favorable circumstances for financial markets (a deal that allows considerable access for the UK) or acute uncertainty (a no-deal), at least it would be over. Well, that assurance is as clouded as the expected outcome from the negotiations themselves. Shortly after I wrote the Brexit update last week whereby there was a clear timeline for another meaningful vote on the Prime Minister’s proposals – after Parliament voted for an extension of negotiations – the Speaker to the House of Commons thwarted the effort when he said the scheme would not be reconsidered unless it was materially different. It is likely that see another significant change in this drama any times (and even multiple times) this week. At Prime Minister May’s request, the European Commission agreed to an extension of the discussions beyond the original Article 50 end date for this coming Friday. Yet, where the PM intreated a postponement out to the end of June, the EU agreed only to May 22nd – the day before European Parliamentary elections. Beyond that date, the UK would theoretically remain under the regulations and laws of the EU but would have no say in their direction which wouldn’t appeal to either side. So, now we are faced with another ‘fluid’ two months of critical deadlines. This week, it has been suggested the government will try to put up once again for a meaningful vote – though it is still not clear whether the proposal will be meaningfully different (the EU has offered no further concessions) or there has been a successful challenge against the Commons speaker. When this could be put up to vote is unclear, but it has been suggested between Monday and Wednesday. If the proposal is approved, the timeline to May 22nd will remain and we will start to see a genuine path form. If it is not, then the following week Parliament will have to indicate that “they have a way forward”. If they do not, an extension or no deal will likely be considered for April 12th – out to the previously mentioned May 22nd date. If we pass April 12th without a clear plan, the probabilities of a ‘no deal’ or ‘no Brexit’ will rise significantly. Those two scenarios are extreme and on the opposite end of the spectrum. From a Pound trader or global investor considering UK exposure, you can imagine what a situation where the probability of diametrically-opposed, market-moving outcomes are considered balanced would do to the markets. It will curb market liquidity and leverage uncertainty. That would translate into divestment, difficulty establishing trends and serious volatility. If that isn’t your cup of tea, it is best to seek opportunities elsewhere for the next few months until this is sorted.
  13. 2 points
    Market action proves it again: this market hinges on the Fed: The US Fed has proven itself as the most important game in town for traders. The FOMC met this morning, and lo-and-behold: the dovish Fed has proven more dovish than previously thought; the patient Fed has proven more patient that previously thought. Interest rates have remained on hold, but everyone knew that was to be the case today. It was about the dot-plots, the neutral-rate, the economic projections, and the balance sheet run-off. On all accounts, the Fed has downgraded their views on the outlook. And boy, have markets responded. The S&P500 has proven its major-sensitivity to FOMC policy and whipsawed alongside a fall in US Treasury yields, as traders price-in rate cuts from the Fed in the future. The US Dollar sends some asset classes into a tizz: The US Dollar has tumbled across the board consequently, pushing gold prices higher. The Australian Dollar, even for all its current unattractiveness, has burst higher, to be trading back toward the 0.7150 mark. Commodity prices, especially those of thriving industrial metals, have also rallied courtesy of the weaker greenback. Emerging market currencies are collectively stronger, too. This is all coming because traders are more-or-less betting that the Fed is at the end of its hiking cycle, and financial conditions will not be constricted by policy-maker intervention. Relatively cheap money will continue to flow, as yields remain depressed, and allow for the (sometimes wonton) risk-taking conditions that markets have grown used to in the past decade. Some risk being taken again, though somewhat nervously: The play into risk-assets makes everything sound quite rosy. There are caveats to this, however. And that relates to what’s been inferred about global growth from the Fed’s meeting this morning. Implicitly, at the very least, the Fed has acknowledged that growth in the US and world economy is all but certain to slow-down. It wasn’t said outright – a central banker would never want to be anything less than cautiously optimistic – but the tone of Fed Chair Powell at his presser suggests a Fed that is sufficiently concerned about the global economy that they will definitively reverse its policy “normalization” course. Positivity was maintained by the Fed about US economic conditions, outrightly. However, the market has read between the lines, and it doesn’t like what it sees. Interest rates are now expected to be on hold for this cycle: So: although swung around post release, the more important bond market is telling a clearer story. The yield on the US 10 Year Treasuries have tumbled nearly 8 points to 2.53 percent, and the yield on US 2 Year Treasuries has fallen 7 points to 2.39 per cent. More remarkably, the yield on Treasuries with 3, 5- and 7-year maturities have dropped over nine points, creating a yield curve with a very flat belly. Of most concern here is that all of these securities are trading just at, or well below, the Fed’s current effective overnight-cash-rate of 2.40 per cent. Traders are now pricing in a greater than 50 per cent chance the Fed will cut rates by early next year, on the basis of deteriorating economic conditions. It’s getting harder for the Fed to get the right balance: The tight rope is getting narrower. For market participants, as always: on one side of it sits the need for accommodative financial conditions, on the other the need for robust growth conditions. It’s the rudimentary in principle, though complicated in practice, interplay between the credit cycle and the business cycle. Out of this Fed meeting, the proverbial tight rope walker is nervously shifting her gaze down towards the economic growth outlook. Powell and his team have apparently not struck the necessary equilibrium in its approach to its policy and communications to the market. Yes (again), risk assets have rallied, but right now, not in such a way that suggests the bulls are significantly more confident in the investment environment being planted before them. Other stories also important, though not as much as the Fed: Some of this could be attributed to the overhang coming from some of the other significant economic stories yesterday. Sentiment has been dented by news that key EU figure Donald Tusk may demand that no Brexit extension is granted for the UK; it has also been liver-punched by a story suggesting US President Trump does not necessarily see a lifting of tariffs on China occurring in any US-Sino trade deal. Once more: it does appear that markets have seen the greatest gravitas in the Fed meeting, though. And traders’ nervousness is being betrayed by this: despite a dovish tact, corporate credit spreads have rallied, the VIX is off its multi-year lows, and US Break-evens are revealing greater inflation risk in the US economy. Australian markets to be defined by Fed and employment numbers: Fittingly, SPI Futures are suggesting the ASX200 will open somewhere between 5-and-10 points lower this morning. Speaking of markets and the growth outlook, not only will Australian trade be impacted by the fall-out from the Fed’s nervously dovish tilt, we also get some highly anticipated employment figures out this morning. The currency and rates markets will be what to watch for: the themes driving the ASX200 this week is the renewed push in iron ore prices, along with the rotation into yield-driven defensive sectors as Australian ACGB yields tumble. The RBA have hitched their hopes for the Australian economy on a tightening labour market and subsequent lift in wages growth and inflation. Watch therefore today for any major downside miss in employment numbers. Written by Kyle Rodda - IG Australia
  14. 2 points
    The IG web trading platform has several alert functions which can be used to notify you of potential trading opportunities and market volatility. We have different alerts for all types of traders, from the technical analyst to the long-term investor. Before we get into the different alert types it’s worth making sure your Notification Preferences on MyIG are set up correctly and notifications are turned on within your mobile settings area. The blog article on the right may be of help if you would like a walk through of turning on notifications. Setting up Price Change alerts A Price Change alert will notify you of either a percentage move or a points-based movement over a set time frame. These alerts are great for applying to assets in your open positions window, as well as markets you are looking to trade on. Percentage or points-based movement Variable time frame of 5 minutes, 1 hour or 1 day Add a message if you wish These will continually trigger until you remove them from the ‘Alerts’ fly out on the left-hand side. Therefore, if you set up an alert to be notified if Spot Gold moves by 1% in a day, and there are three days’ worth of 1% movements back to back, you’ll be alerted for each of these moves. Price Change alert ideas Set up a Price Change alert for a 2% move in a day for a major index such as the S&P or Wall Street. This sort of move in a single day would probably suggest a key market event has happened. Set up a Price Change alert for an x% move in a stock you have on your watch list. Maybe a significant move would present a swing trade opportunity. Setting up Price Level alerts A Price Level alert will notify you when a specific price point has been breached by the market. You can be notified if either the buy or sell price passes your desired threshold. Be alerted to a specific price movement, e.g. If the buy price of gold reaches 1290 Add a short message if you wish These are only triggered once Price Level alert ideas Set a Price Level alert on the VIX Volatility Index if the price reaches 17, 20, and 25. A VIX movement above 20 generally suggests market volatility and potentially opportunity to trade. Historically the median of the VIX is around 17, and anything below this suggests markets are likely to be a little flat. Setting up support and resistance levels but want to re-evaluate the markets when those price points are reached? Use a Price Level alert. Setting up Indicator alerts You can set up indicator alerts from the dealing platform under the alerts tab. You need to pick a resolution and price for the alert to look at, and then you can start adding indicators. Use indicator alerts to be notified of your criteria being hit from your technical analysis Choose to be alerted once, or multiple times Add up to 4 indicators from a choice of 11 to the same alert Add indicators on the charts by right clicking to get a rough idea of when/if your alert will trigger. Indicator alert ideas These alerts can be as simple or as complicated as you like. You can find a lot of information on technical analysis on IG.com, YouTube, or by searching for strategies related to ‘x’ indicator. For example; A crossover strategy: when two moving averages cross, for example the short term 50 MA moving above the 200 MA, it may indicate an upward price trend. Setting up macroeconomic alerts from the Economic Calendar You can access IGs Economic Calendar from within the dealing platform down the left hand fly out. Once the calendar has opened in a new tab select the date and use the ‘check’ tick column if you want to be notified about an event. Clicking the cog at the top of the column allows you to set the specific notification preferences for these alerts (for example, notify before or after the event, and how you want to be notified). Try it out by searching for the next Non-Farm Payroll (NFP) figure and set the alert to be notified 15 minutes before the event, as well as on the event. You should receive a notification with expectations, along with the actual results afterwards.
  15. 2 points
    Hong Kong’s Hang Seng index pulled back last night with gambling shares having a bad time after falling revenues in Macau's casino region. US-Sino tensions rise as a US ship enters Chinese territory. Stay on top of currency markets as trade war tensions rise with #IGForexChat. The financial and healthcare sectors pushed the ASX lower whilst China remained closed for another public holiday. Bank of Australia holds cash rate at 1.5%. Japan’s Nikkei was the lone star in the Asian overnight session with a positive reading. USD/JPY climbs to 11 month high as speculators increase their short position on the yen. Euro looks to rebound following the Italian budget movement. Analysts suggest it may return to its previous trend, albeit a bearish one. Continued speculation for the conservative conference today with Theresa May expected to announce some concessions in her Brexit deal. Boris Johnson to speak later today. Yesterday saw a volatility spike in GBP/USD which we could see again today on the right type of news. Aston Martin has cut its maximum share price for its IPO from £22.50 down to £20 flat. The valuation toward the higher end of this downgrade should see the car manufacturer still slip into the FTSE 100 at £5bn, with the lowest constituent currently £4.7 in the existing index. Niche demand for high end luxury manufacturing by fund managers was the culprit. Expectations are still there for an IPO this week. Asian overnight: Japanese markets remained the one area of strength yet again overnight, as the ASX 200 and Hang Seng traded in the red once more. China remains on holiday and will be so for the rest of the week. The big overnight data point came in the form of the RBA rate decision, with the bank retaining rates at 1.5% as expected. The bank continues to see issues in the form of low household income growth, risks to consumption, and inflationary pressure from rising oil prices, pointing towards continued low rates for some time yet. LNG could be an interesting market to follow over winter... As public sentiment on pollution changes in China many are speculating on a repeat of last years movements in the liquefied natural gas market going into the colder months. Last year LNG imports were nearly 50% higher than the previous year. The key uncertainties for the market will be weather conditions (the colder the better for bullish traders), and whether or not the Chinese government has managed to maintain and hold onto its inventories and reserves (in which case the lower the better). LNG could be an interesting market to follow over winter as public sentiment on pollution hasn’t changed much from 12 months previous, and strong demand in Europe continues to buoy the price. You can blame that on an increase in carbon emission credit cost (boosting demand for cleaner fuels) and a colder start to the year. UK, US and Europe: Looking ahead, the UK construction PMI provides the centre point of European trade, with markets likely to continue looking towards any statements or rumours around Brexit for further GBP volatility. Keep an eye out for appearances from Fed member Quarles and Powell in the afternoon. South Africa: Equity markets are under pressure once again this morning, led by declines in European Futures. Markets are drawing concern from Italy's budget proposal, which the EU have said could invoke a Greek styled financial crisis. US Futures are trading mixed. In turn, we expect the Jse AllShare index to open up marginally lower this morning. Metal prices are trading slightly firmer this morning while oil prices continue to post significant gains in the wake of looming Iran sanctions and OPEC's suggested capacity constraints. Tencent Holdings is down 2.2% in Asia, suggestive of a weaker start for major holding company Naspers. BHP Billiton is trading 0.25% higher in Australia, suggestive of a marginally positive start for local diversified resource counters. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 9.30am – UK construction PMI (September): expected to rise to 55 from 52.9. Market to watch: GBP crosses Corporate News, Upgrades and Downgrades Ferguson reported pre-tax profit for the year rose 16.6% to $1.19 billion, while revenue was up 7.6% to $20.75 billion. The dividend was raised by 21% to 189.3 cents per share. Ryanair said that volume rose 11% in September, though strike action caused the cancellation of 400 flights in the month. Revolution Bars said that pre-tax losses were £3.6 million, from a profit of £5.2 million a year earlier. Datatec has released a trading statement for 1H19 guiding that headline earnings per share is expected to be between 0.5 and 1 US cents (1H18 Reported: loss per share of 5.8 US cents). Group Five Ltd FY18 results showed a loss per share of 1334c which compares with a loss per share of 829c in the previous year. Credit Agricole raised to overweight at Morgan Stanley Metso upgraded to overweight at JPMorgan Atlas Mara downgraded to hold at Renaissance Capital Danske Bank cut to equal-weight at Morgan Stanley Royal Mail downgraded to underweight at JPMorgan Learning Technologies Group downgraded to add at Peel Hunt IGTV featured video 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.
  16. 2 points
    MSCI's broadest index of Asia-Pacific shares outside Japan fell 0.3 percent, while Japan's Nikkei dropped 0.5. Global bond sell-off triggers the biggest decline in US equities in nearly four months. As 10-year treasury yields surge to the highest level since 2011, fears that current rates could restrain growth has hit stocks across the US, Europe and Asia. FTSE 100 posting its biggest drop since August yesterday. The Dow Jones drops more than 250 points as treasury yield rates surge, while the S&P 500 lost 0.82 percent and the Nasdaq Composite dropped 1.81 percent. In EM the Indian rupee has strengthened going into the RBI interest rate decision. After significant devaluation of the Turkish lira recently, it looks like the re-balancing of its economy is under way as the trade ministry report an increase in exports. This has been faster and stronger than expected. US non-farm payroll release today. US Labour department forecasts an increase of 185,000 in non-farm payrolls last month and the unemployment rate is expected to fall by 0.1% to 3.8% - an 18 year low. Asian overnight: Once again it is the Australian ASX 200 which provides the one outlier to a wider bearish story within Asia, where China remains the notable absence for the duration of the week. Data-wise, the Australian economy received a boost in the form of a stronger retail sales number, coming in at 0.3% as expected. Emerging market currencies have been under pressure this week, and the Indian Rupee is in focus today, the RBI expected to raise rates later in the morning. As always any USD cross will likely experience significant volatility around NFP UK, US and Europe: The US Treasury yield is making headlines and often seen as a ‘safe haven’ or risk free investment over periods of potential uncertainty. A rising curve is generally seen as negative across other asset types. Wall Street also took a hit as FANG stock drew blood as investors and speculators begin to price in a potential acceleration in inflation. Continued positives in jobless claims and factory orders out yesterday all painted a good picture for the US economy, nicely lining up the non farm payrolls figure due at 1.30pm BST. As always any USD cross will likely experience significant volatility around this time, along with most assets quoted in USD. Bond markets, oil, and inelastic soft commodities may also see fallout. A relatively quiet European session today sees very little in the way of major market moving events, where the German factory orders has already been released before the bell (up to 2% vs 0.7% expected). Following yesterday’s relative lull in data, today sees all eyes turn towards the US once more, with the jobs report due out alongside the Canadian version. The rise in yields off the back of strong US data on Wednesday is likely to come back into play for traders. Those following this trade should keep an eye on the jobs numbers, as a similar outperformance is expected to bring another surge. Meanwhile, coming off the back of the US-Canada trade deal, the Canadian dollar could receive another boost with markets expecting an improved employment change and unemployment rate today. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 1.30pm – US non-farm payrolls (September), balance of trade (August): forecast to see 185K jobs created from a reading of 201K a month earlier. The unemployment rate is expected to fall to 3.8% from 3.9%, while average hourly earnings rise 0.2% MoM from 0.4%. Trade deficit to narrow to $50 billion from $50.1 billion. Markets to watch: US indices, USD crosses 1.30pm – Canada employment (September): 11,400 jobs expected from a drop of 51,600 a month earlier. Market to watch: CAD crosses Corporate News, Upgrades and Downgrades Lenovo shares drop 20% following report over alleged Chinese spy chips. Unilever withdraws proposal to simplify dual structure. Danske Bank confirmed yesterday that the US DoJ is investigating potential money laundering activity and that they’re received a ‘request for information’. Danish regulators have said they want the bank to increase their capital reserves, whilst Danske themselves recently confirmed they’re going to stop a share buy back program. Shares are down nearly 40% from the beginning of the year. Intu Properties faces a takeover by its largest investor, Peel Group, in a multi-billion pound deal. Toyota recalling over 2.4 million hybrid vehicles over battery faults. Centamin has lowered gold production guidance for the year, with output now expected to be around 480,000 ounces, below the 505-515K oz. However, Q3 production was up 27%. Intertek Upgraded to Buy at Berenberg Eutelsat Upgraded to Buy at Goldman Proximus Upgraded to Overweight at JPMorgan Helvetia Downgraded to Hold at Baader Helvea Antofagasta Downgraded to Sell at Goldman IGTV featured video 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.
  17. 2 points
    Theresa May declares to end austerity in the much anticipated Conservative party conference yesterday. Bloomberg has also reported this morning that the prime minister plans to rush her Brexit deal through parliament in a bid to stop the opposition voting down the treaty. The DOW hits record highs of 26,951.81 but stocks close with minimal change on the day as rising interest rates have made investors wary. The tension between the U.S. and China continues as China plans to sell $3bn worth of dollar bonds. In EM the Brazilian stock market is having it's strongest rally over the past two years, up more than 3%, as far-right candidate Jair Bolsonaro has extended his lead in the Brazilian election, according to opinion polls. European market regulators, ESMA, are drafting a number of bilateral agreements with the FCA in an effort to reduce market instability going into Brexit. A lack of political agreement is the main worry, which the second tier financial regulation helps to mitigate. The 10-year US treasury rose to a seven year high in response to yesterday’s impressive US data which also drove the likes of the Dow and S&P 500 to record highs. AUD has fallen steadily against the US dollar, coming in at the lowest since mid-September, initially fueled by the release of weaker than anticipated local building approvals data in Australia. Asian overnight: Yet another day of losses for Asian markets has seen Japanese and Hong Kong indices trading in the red, with Australia representing the one outlier to that story. China remains on holiday and will do so for the duration of the week. Data-wise, the Australian trade data saw an improvement to the overall balance following a rise in exports (1% from -1%) and flat imports (0%). UK, US and Europe: Looking ahead, we have precious few notable economic events to look out for, with US unemployment claims, factory orders, and the Canadian Ivey PMI numbers providing the only releases worth watching out for. This leaves markets to ponder ongoing themes, with Brexit (post-Conservative conference), Italian deficit (as coalition aim to produce budget) and the US-China trade war remaining key drivers of uncertainty. The recent rallying of oil prices seems to have come to an end as prices fell from four-year highs. Theresa May has called for party unity over her plan to divorce the UK from the EU or risk having "no Brexit at all". The cry for support comes after Boris Johnson's explosive speech on Tuesday, which the prime minister admits made her "cross". RBS Boss, Ross McEwan, is someone who is hoping that Brexit does not get to the stage of a no-deal, as he warns a bad Brexit could see the UK go into a recession. The recent rallying of oil prices seems to have come to an end as prices fell from four-year highs. This is the result of rising U.S. oil inventories and multiple sources reporting that Saudi Arabia and Russia struck a private deal in September to raise output without consulting other producers, including OPEC. South Africa: US Index Futures and Asian equity markets are suggesting a softer start for our local bourse (Jse All Share Index). A stronger than expected US private sector jobs report yesterday, has resulted in a strengthening dollar and higher treasury yields. In turn precious metal prices have come under pressure while the rand has softened against the greenback. Tencent Holdings is trading 2.5% lower in Asia, suggestive of a similar start for major holding company Naspers. BHP Billiton is up 0.9% in Australia, suggestive of a positive start for local diversified resource counters. Today's economic calendar is light in terms of scheduled news events, with perhaps FOMC member Quarles' public address at 3:15pm the most relevant to watch out for. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 1.30pm – US initial jobless claims (w/e 29 September): claims forecast to fall to 206K from 214K. Markets to watch: US indices, USD crosses 3pm – Canada Ivey PMI (September, seasonally adjusted): expected to decline to 61.4 from 61.9. Market to watch: CAD crosses Corporate News, Upgrades and Downgrades Ted Baker said that revenue rose 3.5% to £306 million for the first half, but pre-tax profit dropped 3.2% to £24.5 million. Electrocomponents reported a 10% rise in like-for-like sales for the first half, and half-year adjusted pre-tax profit is expected to be around £100 million, up from £79 million. Aston Martin shares fell on it's first full day of trading, having opened at £19 the shares fell as low as £17.75 before closing for the day at £18.10. Another recent company that had an IPO in the UK, the Funding Circle, also saw their stock price dive as much as 24%. With both of the recent high-profile IPO's in the UK failing to live up to initial expectations, it will be interesting to see trader sentiment for upcoming IPO's. The disappointing debuts have put the spotlight on some of the biggest investment banks in the world who were involved in the IPO's, such as BoAML, JPM, Morgan Stanley and Goldman, as analysts suggest the newly-listed companies were not priced correctly. Barnes and Noble is up 20% as the board has initiated a review process which aims to evaluate strategic alternatives, which includes the sale of the company. Cannabis stock Tilray has fallen 12% in the extended session after the firm announced plans to offer $400 million in convertible notes to institutional Canadian investors, which can be converted into shares. Watch out for Constellation, Corona beer owner, who are reporting earnings later today at 15:30 UK time. The company made headlines earlier this year as they poured $4bn into Canopy Growth, Canada's top cannabis producer. Software companies Horton and Cloudera have announced a merger which saw both shares raise 19% and 18% respectively. Swisscom Raised to Equal-weight at Morgan Stanley Gecina Rated New Overweight at Barclays Shaftesbury Upgraded to Neutral at Kempen & Co Swedbank Downgraded to Neutral at JPMorgan Sunrise Cut to Underweight at Morgan Stanley IGTV featured video 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.
  18. 2 points
    The London Metal Exchange: LME The LME is one of the last pit traded venues in the world which has escaped the computerisation and digitalisation of the modern world. The iconic image of the 80's with men in brightly coloured suits has all but gone, however the live 'ring' as it's known is still the number one place in the world to trade a number of ferrous, non-ferrous, precious and minor metals. LME participants can trade and take or make delivery of aluminium, copper, tin, nickel, zinc, lead, aluminium alloy and NASAAC, as well as steel and scrap contracts, LME silver and LME gold, and other lesser known metals such as cobalt and molybdenum futures. We recently spent an afternoon at the venue and I managed to take the following video which I thought I would share with Community members. The LME is used for dealers and institutional trading houses who sometimes work on behalf of real world companies such as car manufacturers who need aluminium for delivery. A staggering 80% of the worlds industrial metal prices are set in this room. Everyone tends to wait until the end of the session, so the final few moments can be very exciting! It's only a minute or so long, but you can see the excitement as people can't even stay on their seats around the 30 second mark! Trade LME metals with IG As as exciting as this can be, I still think it's quite good that you can get exposure to all these same assets on the IG dealing dealing platform. Simply check out the Commodities section on the left hand fly out, and scroll to 'Base Metals'. You can also use the 'news' section on the left to search for specific news relating to these markets which may be lesser known to yourself.
  19. 2 points
    China trade war escalates as new tariffs kick in: U.S. economy set to slow from here on, damaged by trade war EM ASIA FX soften as dollar recovers after falling for six straight sessions Wall Street sets record for longest bull run in history; Key S&P 500 index passes landmark as it goes 3,453 days without major correction Brexit contingency plan papers released; Brexit could be good news for Britain's farmers Australian dollar drops as three government ministers quit Crude oil sees it's largest gains in two months on varying signs of ebbing supply Asian overnight: Another indecisive session overnight has seen weakness in Hong Kong and Australian stocks counteract the already unimpressive gains seen in Japan and China. The Australian dollar came under pressure after three main cabinet members resigned to switch allegiance to Peter Dutton, who aims to become the next Liberal leader and ultimately the next Prime Minister. The dollar also strengthened overnight following an optimistic outlook from the Fed, with yesterday’s minutes pointing towards a rate hike at the next meeting despite concerns over trade tensions. Trade talks in China continue into their second day today, yet with neither side likely to cede much ground, it seems likely we will see a positive resolution. UK, US and Europe: A very busy economic calendar sees the day kick off with a host of eurozone PMI readings from the likes of the French, German, and eurozone services and manufacturing sectors. This does carry into the afternoon, with the US manufacturing and services PMI surveys due for release. Also keep an eye out for the eurozone minutes, alongside consumer confidence data, which will both bring expectations of heightened volatility for the euro. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 8am – 9am – French, German, eurozone mfg & services PMI (August, flash): German mfg PMI to fall to 55.5 from 56.9, while eurozone mfg PMI to fall to 54.6 from 55.1. Markets to watch: eurozone indices, EUR crosses 12.30pm – ECB meeting minutes: these could provide some support to a flagging euro if they reinforce the image of a bank moving towards tightening policy in the longer term. Markets to watch: eurozone indices, EUR crosses 1.30pm – US initial jobless claims (w/e 18 August): claims expected to rise to 217K from 212K. Markets to watch: US indices, USD crosses 2.45pm – US mfg & services PMI (August, flash): mfg PMI to fall to 55.2 from 55.3, while services PMI to fall to 54 from 56. Markets to watch: US indices, USD crosses 3pm – US new home sales (July): forecast to rise 0.6% MoM from -5.3%. Markets to watch: US indices, USD crosses 3pm – eurozone consumer confidence (August, flash): forecast to fall to -0.7 from -0.6. Markets to watch: eurozone indices, EUR crosses Corporate News, Upgrades and Downgrades CRH said that first-half profits rose 4.6% to €497 million, while sales were 1% higher at €11.9 billion. Performance was affected by weather disruption in Europe and North America, and currency headwinds. The dividend was raised by 2.1% to 19.6 cents per share. Premier Oil reported pre-tax profit of $98.4 million for the first half, up from $40.7 a year earlier, while cash flow fell to $276.6 million from $282.7 million. Net debt was cut to $2.65 billion from $2.72 billion a year earlier. OneSavings Bank has upgraded tis growth forecast thanks to a good start to 2018. Pre-tax profit in the first half rose 17% to £91.8 million, with the loan book up 11% to £8.1 billion. Growth is now expected to be in the ‘high teens’, from a previous ‘mid-teens’ forecast. BNP Paribas upgraded to buy at Bankhaus Lampe Masmovil upgraded to overweight at Barclays Sunrise upgraded to overweight at Barclays Zooplus upgraded to hold at Kepler Cheuvreux Deutsche Euroshop cut to hold at Berenberg Terveystalo cut to underweight at Morgan Stanley IGTV featured video 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.
  20. 2 points
    Turkey: Financial markets regained their cool overnight, returning to some semblance of normal trading conditions. Traders appear a little more comfortable with the Turkey situation, apparently reassured by the idea that developed economies and financial markets are shielded from the direr consequences of a Turkish borne financial crisis. The core issue is unlikely to disappear entirely, given hostilities between the US and Turkey have only escalated in recent days. Moreover, global fundamentals will continue to work against broader emerging markets, who look ever-vulnerable to rising global interest rates and a strengthening US Dollar. However, at least when it comes to developed capital markets, it looks like the attitude has shifted to “play on”. Wall Street: Wall Street will cap off the global recovery in equities over the last 24 hours, providing a stable lead for Asian trading today. The benchmark S&P500 ended its four-day losing streak – its longest in several months – to add 0.65 per cent for the session. Earning’s season is practically done and dusted now, with investors now allowed to mull over what it all meant – and how it will affect the future. As it stands currently, the overriding belief is that there are indeed good times still to come. Assuming risks in emerging markets and geopolitical tensions remain to one side – a very big assumption, of course – the S&P seems poised to restart its journey to the all-time high at 2875 achieved earlier this year. ASX: SPI futures are indicating a softer open for the ASX200 this morning, presently pointing a modest 5-point dip at the open. Investors in Australian shares leapt at the opportunity of jumping back in to equities as the Turkey-contagion fears subsided, quickly regaining (in effect) all the territory abandoned during the day prior. It was the financial stocks, following-on from their successful week last week, that led the charge, supported admirably by the index’s relative minnow-sector, information technology. The diminution of macroeconomic themes provided investors with the scope to turn to more fundamental matters in the market, such as the local reporting season. Local earnings: Reporting season news focused primarily on two noteworthy misses yesterday: first from Cochlear, the second from Domino’s Pizza. For Cochlear, the full-year results were quite respectable, revealing that net income expanded 10 per cent and that the company’s dividend pay-out would increase by 11 per cent. However, the share fell by 3.52 per cent, unwinding a portion of the 16 per cent gain achieved by the stock year-to-date, after profit guidance missed expectations and analyst’s consensus changed the stock to “hold”. The story was far more-stark for Domino’s Pizza, with that company missing even the lowest analyst estimate for full year net income, driving its share price down 6.52 per cent. China: Macroeconomic watchers had an eye-on Chinese fundamental data midday yesterday, as China’s National Bureau of Statistics released one of its big monthly data dumps. The monthly release of Retail Sales, Unemployment, Industrial Production and Fixed Asset Investment data has taken on graver significance in recent months, with trader’s combing through any piece of information that could glean an insight into the fundamental strength of a slowing Chinese economy. Yesterday’s release was on balance a poor one, adding to concerns that tariffs and cyclical factors are dragging on the Chinese economy. Despite this, traders largely ignored the news, swept up in the relief of ostensibly lower credit risk from the Turkey debacle – although the Yuan did maintain its affection towards the 6.90 mark. Aussie data: Australian fundamental data will centre on the household sector over the next 24-48 hours. It begins with the release of the Westpac Consumer Sentiment reading at 10.00AM, continues with Wage Price Index data later this morning, and concludes with Employment Data tomorrow. The wage growth figures will be the most pertinent for markets, given the RBA’s imploration that inflation and therefore interest rates will not increase until there are signs that Australian workers are getting a pay rise. Though it was missed by many in the thick of the Turkey panic at the end of last week, cash futures markets more-or-less priced out any more than a 50/50 chance of an interest rate hike from the RBA, following the release of the bank’s quarterly Monetary Policy Statement on Friday. While this market-dynamic remains, watch for an increasingly stifled AUD/USD, particuarly now that we’ve plunged below the 0.7300 handle. UK and the Pound: Better than expected labour market data was released out of the UK last night, ahead of the release of CPI figures tonight. The UK economy is one of the more curious situations for market participants presently, particularly as it relates to future interest rate settings amid ongoing Brexit drama. The implications appear to be weighing on sentiment and economic fundamentals, effectively forcing the BOE to admit recently that strong fundamentals will take a back-seat while an outcome to Brexit is decided. Activity in the pound has hence become of high interest in markets, especially this week, considering scheduled Brexit negotiations on Thursday: the GBP/USD has lost over 3 cents in less than a fortnight, presenting signs of being oversold, but apparently possessing little impetus to reverse this trend. Please note: This 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.
  21. 2 points
    Trade war: Geopolitical ructions became the dominant theme late in North American trade, setting up a day for Asian markets distracted by trade-war developments and rising diplomatic tensions in other geographies. The heightened trade war anxieties were piqued by news that China would be slapping retaliatory tariffs of 25 per cent on $US16b worth of US imports, in response to the Trump administrations go-ahead earlier in the week to implement comparable tariffs on Chinese imports. The trade concerns were then exacerbated by news that the US would increase sanctions on Russia for its involvement in poisoning an ex-Spy in the UK. Both stories are fresh but add to already tense diplomatic relations between the US and China, and the US and Russia: expect the news to rattle Asian and European markets, which have proven far more vulnerable to geopolitical risks. US Indices: Wall Street has slipped in late trade during the North American session, during a day in which US indices traded relatively flat. The industrials laden and therefore trade-war sensitive Dow Jones has given up the most ground, staring down a close of -0.2 per cent. The benchmark S&P500 is still effectively flat, while the NASDAQ has held onto very modest gains, illustrating once-more that the all-conquering tech spacer is what underpins US share-market strength in the face of trade-conflict. US share were showing signs of a potential run toward the record levels set at the start of 2018, with the S&P coming as close as 13 points to that milestone. The inflamed trade-war tensions may put this ambition on hold, notwithstanding the record earning’s season on Wall Street. Oil: Oil prices have experience the most volatility overnight, courtesy of the increase in geopolitical risks, falling several per cent, even despite a lower than expected print in US crude oil inventories. Brent Crude is currently trading around the $US72.35-mark, stripping most of this week’s gains, as markets factor in the greater risk of a global economic slowdown, along with the possibility Russia may intervene in oil markets in response to new sanctions. The dump in oil prices does not bode well for equity markets, which have benefited from climbs in energy stocks in response to the oil rally. The ASX200 will certainly remain amongst the most vulnerable to this dynamic, with eyes now on the performance of the energy and materials sectors today. ASX: SPI futures are slipping as the morning unfolds, as prices in that market progressively fall as news about trade war risks develop. The Australian share market performed relatively well yesterday, adding 0.23 per cent to close at 6268. The closing price placed the ASX effectively in the middle of its recent range, with traders now acclimatising to some sideways trading. It is difficult to imagine that further gains are on the cards for ASX today amid this morning’s trade war developments, particularly given a gathering fall in commodity prices. Perhaps a good indicator of trader sentiment and market strength will be in how well support at around 6235 holds up today. CBA: The major catalyst for the ASX200’s little climb yesterday was the relief rally in the price of CBA shares, which added 2.63 per cent throughout the day. Although the bank’s results effectively ended its run of recorded profits — weighed down by the roughly $1.1b of outlays relating to regulatory costs and legal penalties — the earnings report appeared to reassure investors that the poor results could be pinned on transitory factors, and that the business fundamentals appear strong enough to justify buying at current levels. It will be a point of interest as the markets digests CBA’s earnings and await updates from the other major banks, how far a rally in bank stocks can go: there is certainly a lid on prices around the bank’s pre-Royal Commission levels and given the headwinds of a slack economy and weaker property prices, further climbs in bank stocks seem improbable. China: Chinese markets will likely take much of the attention of global markets today, considering the unwelcomed developments in the trade war. Activity in the Yuan will be closely watched, as it appears the PBOC are beginning to play a big part in supporting the weakening Chinese currency. Anywhere above or near the 6.90 level seems to be the line in the sand for Chinese policy makers, with stabilization measures quickly applied to currency markets when traders push the Yuan through that mark. A strong argument could be made that the actions of the PBOC indicate that Chinese officials won’t look to weaponize the Yuan in this trade war, who appear to be more worried for now about the issue of financial stability within the Chinese economy. RBNZ: The RBNZ kept interest rates on hold this morning. More to come tomorrow. Please note: This 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.
  22. 1 point
    During the US Thanksgiving holiday, we will be making some changes to our usual trading hours. These adjustments will take place between Wednesday 27 November and Friday 29 November 2019, after which we’ll go back to normal trading hours. (All times below are GMT). Wednesday 27 November Usual closing times on US markets, US equities post-market open as normal. Thursday 28 November US equity markets will be closed. US index futures close early at 6pm. We will make an out-of-hours price on Wall Street, US 500 and US Tech 100 until futures re-open at 11pm. The Volatility Index closes early at 4.30pm. US Crude closes at 6pm, Brent Crude closes at 6.30pm. The US 30-Day Fed Funds Rate and the US Dollar Basket close at 6pm. Metals, including Gold and Silver, close at 6pm. US soft commodities will be closed. London Sugar No.5 closes early at 5pm. Friday 29 November US equity markets will close early at 6pm. There will be no pre or post-market trading. US index futures and the Volatility Index will close early at 6.15pm. We will make an out-of-hours price on Wall Street, US 500 and US Tech 100 until 9pm. US Crude closes at 6.45pm, Brent Crude closes at 7pm. The US 30-Day Fed Funds Rate and the US Dollar Basket close at 6.15pm. Metals, including Gold and Silver, close at 6.45pm. Cotton opens late at 1pm. Chicago Wheat opens late at 2.30pm. US soft commodities (except New York No.11 Sugar) will close early at 6pm. Lumber trades 3-6pm, Live Cattle trades 2-6.15pm. The futures desk and all 24-hour indices close at 9pm, FX closes at 10pm. Let me know if you need clarification on this.
  23. 1 point
    ECB Didn’t Live Up to Lofty Speculation, Will the Fed? There is a span of high-level rate decisions this coming week, but only one of these updates carries serious potential to not only move its domestic assets but further potential to generate reaction from the entire financial system: the FOMC. This past week, the European Central Bank offered us a look into how far the dovish reach of the largest central banks is currently stretching. Against heavy speculation that the group was going to clearly lay out the runway to further rate cuts and escalation of unorthodox policy, they instead offered a more reserved view of their plans. Fending off an approximate 40 percent probability of another 10 basis point rate cut, the ECB held rates and offered up language that said they expect to keep rates at their current level “or lower” through the first half of 2020. On a full swing back into stimulus – versus the half measure of the TLTRO – President Draghi said they were looking into options. There is complication in the ECB pushing ahead with further accommodation as new leadership is coming in a couple months. This seems to concern them more than the risks that their increasingly extreme measures risk degrading the efficacy of monetary policy all together, particularly risky in the event that we face another global slowdown or financial crisis. The swell in European investor fears about the prospects for the future may be soothed by an outside wind if it proves timely and fully supportive. According to the market, the Federal Reserve is certain to hike rates at its meeting on Wednesday. Fed Funds futures are forecasting a 100 percent change of a 25 basis point (bp) cut and is reaching further to an approximate 25 percent probability of a 50 bp move. That is unlikely. Under scrutiny from the President and the markets, the Fed is attempting to signal its consistency as it works to reinsure its credibility. In the June Summary of Economic Projections (SEP), the median forecast on yields was for no change to the benchmark this year. A 25 bp cut at this meeting would not deviate too far from their assessment as the dot plot showed at least 8 members expected at least one 25bp cut (1 anticipated two), so it was a close sway in majority. That said, 50 bp against a backdrop of data that has performed well and equity markets are records would send the wrong signal: either one of hostage to fear of volatility or a sense of panic that they are not sharing about the future. How much is the markets banking on the Fed to converge with its much lower yielding counterparts? That answer will likely spell how much volatility we should expect. Donald Trump Throws a Curve Ball on Trade Wars Fear over trade wars had receded recently as confusion seemed to replace the tangible pain of tactical threats. Between the US and China, headlines were more about the next round of talks that were being conducted at a high level in China while trouble over the status of Huawei and the retaliation that could bring was fading out of the news cycle. We almost cleared the week with a ‘no news is good news’ perspective when President Trump decided to weigh in on something the market had long suspected was a strategy but presumed would never be made certain by officials. In offhand remarks that suggest he does not appreciate the fear that can be easily sparked in speculative markets, Trump said China may not agree to any trade deal until after the Presidential elections in November 2020. That may very well be China’s strategy: wait it out until a more amenable administration potentially takes over. That said, the Chinese economy has already taken a significant blow from the standoff thus far. It is unlikely they would want to keep it up that long on the chance of turnover. This may also reflect a Trump administration tactic: refuse to compromise out to the election and use it as a campaign point that no other government would be able to close the deal. Either way, this is a concerning musing. And, in the meantime, don’t forget that there is pressure building up on other fronts. For the United States, the question of open trade war with Europe seems to be graining tangibility with the theorizing of explicit moves from both sides for a variety of perceived infringements including the Airbus-Boeing spat. The most costly threat though remains the potential that the US is considering a blanket 25 percent tariff on all autos and auto parts which could encompass many countries but carry the most pain for Germany, Japan and South Korea. Speaking of those latter two, there is an Asia-specific trade war burgeoning between Japan and South Korea with the former threatening the supply materials necessary for the latter to produce computer chips. And, though it isn’t often considered a ‘trade war’ front, the UK-EU divorce carries with it clear trade disruption implications that will compound a global figure in collective trade. Another Verse in Milestone Towards Currency Wars Most business leaders and financiers publicly project a confidence that the world faces little or no risk that a currency war could erupt between the largest economies in the world. Privately, they are very likely worrying over the pressure building up behind active measures to devalue currencies and setting off a chain reaction of financial instability. It isn’t a stretch to suggest certain major currencies are artificially deflated, but most instances are not this way intentionally (for the purpose of economic advantage over global counterparts) or have been implemented recently. The ECB deflated the Euro with direct threats of monetary policy back in 2014 when EURUSD was pressuring 1.4000. Japanese officials slipped up before that when they suggested they are pursuing their open-ended QE program in an effort to drive their currency lower to afford a trade advantage. They later back-tracked and now simply say their ceaseless JGB purchases are a bid to restart inflation, which has floundered for three decades. The Swiss Franc is faced with constant intervention threat by the SNB, but their efforts are tied to the Euro and ECB’s overwhelming stimulus drive. In most instances around the world, policy officials are attempting to account for missing their stated policy goals (such as inflation) or offset external pressures that are themselves the results of a collective unorthodox policy epoch. However, in this desperation, there is increasingly an assumption of malicious intent from trade partners. President Trump is certainly suspicious of global counterparts. He reiterated his concerns this past week in something of a different light. Seemingly facing pressure by advisers for his frequent lamenting of the strong Dollar being interpreted as a ‘weak Dollar’ policy, the President said the Greenback is still the currency of choice – which he supports – while the Euro wasn’t doing well and the Yuan was ‘very weak’. That still looks like intent. What is troubling were the reports that trade adviser – and noted extreme China hawk – Peter Navarro had presented a range of ideas to possibly devalue the Dollar to the administration. They rejected the ideas, but the fact that this is taking place at all certainly raises the threat level of a currency war extremely high.
  24. 1 point
    There is Way Too Much for the G20 to Cover Typically, the G-20 summits that brings together leaders for some of the world’s largest developed economies cover matters that are important but not especially urgent. For the meeting in Osaka, Japan this coming Thursday and Friday (June 28-29), the members will officially and unofficially have to cover topics of exceeding importance. That would seem unusual considering we are still in the longest bull market on record and the closest state to general peace that we’ve seen in some time. On the official agenda are: global economy; trade and investment; innovation; environment and energy; employment; women’s empowerment; development; and health. As you can imagine, there will be certain themes that are more loaded than others and likely to generate more friction in group discussion as well as sideline talks than others. Since negotiations last broke down and the US raised its tariff rate on $200 billion in Chinese imports – to which China moved to match the tax on $60 billion in US goods. Trade wars will be the most frustrating topic to discuss for most of the members. In particular, the US and China have used this gathering as a timeline for the next stage of an ongoing trade war between the two economic giants. Since negotiations last broke down and the US raised its tariff rate on $200 billion in Chinese imports – to which China moved to match the tax on $60 billion in US goods – the rhetoric between the two has ranged between mild encouragement to outright threats. If President Trump’s timeline holds, the stakes are high for a breakthrough between the two. After the last move to raise the stakes, the White House said it would expand its onerous levy against its trade partner to encompass all of its goods coming into the US (another $300 billion or more) in ‘three or four weeks’. That time frame has come and gone which prompted negotiators to move out the deadline to a natural conversation between Trump and Xi at the summit. If these two fail to come to an understanding in order to de-escalate their economic conflict, it will represent the biggest notional curb on growth thus far. It would also almost certainly usher in the next stage of unorthodox measures as the options for retaliation have expended standard arsenal. China cannot meet the US like-for-like with straightforward taxes and will therefore need to consider actions on rare earth materials, blacklisting US entities, US asset exposure levels, exchange rate manipulation and other as-yet unmentioned options. The circumstances between these two giants is enormous but it is even more desperate for the other countries around the world who are caught in the middle as collateral damage. Further, depending on how President Trump views the benefits-risk balance of the affair with China – and conversely Mexico and Canada – there is the persistent risk that the Trump administration could expand its trade vigilantism against host Japan, the Eurozone and many of the other G-20 members. One thing is clear from previous gatherings of state leaders, President Trump does not respond well to multiple countries ganging up on him whether through aggression or frustrated pleas for reason. While trade will likely take up a disproportionate amount of the mental focus, there are further matters of flagging economic growth and geopolitical tensions to discuss. Trade is compounding a general cooling of economic activity and there is an unmistakable awareness as to the limitations of over-extended monetary policy. Further, protectionism is casting plans to offer more through burdened central banks and even plans for fiscal policy as provocative means to compete to the detriment of global peers. As for global relationships, there are many points of fray, but the only area where a military war seems a genuine risk at the moment is between the US and Iran. The downing of a US drone by Iran followed by reports that a retaliation was green lit then forestalled has raised the threat level enormously. Perhaps after these ‘manufactured’ issues are thoroughly covered, we will see a serious discussion on ingrained concerns like the environment and gender equality. The Market Prefers Its Own Interpretation of the Fed’s Options Sentiment in the global markets is a force of nature. It can readily overpower subtlety which is what happened this past week following the FOMC rate decision. At its ‘quarterly’ gathering, the world’s largest central bank held its policy mix unchanged with a benchmark rate at a range of 2.25 to 2.50 percent while its balance sheet efforts held trajectory. While the market had afforded an approximate 25 percent probability of a cut, there was little actual surprise and repositioning to be registered by the market. When it came to forecasts, however, there seemed to be outright disbelief; and the markets were willing to run with their own interpretations of what the future held. Looking to the group’s own Summary of Economic Projections (SEP), there was an official forecasts for no change to the current rate spread through the remainder of this year, one 25-basis point cut projected in 2020 and a subsequent rebound to our present altitude in 2021. That strayed dramatically from the market’s own debate over two or three cuts this year and further easing at a similar pace into 2020. Given the nature of speculation, we will be left with a state of hyper vigilance around data and rhetoric from Fed officials that reinforces the market’s skepticism or contradicts it. After the Fed’s attempt to throttle expectations, the markets only solidified its forecast with Fed Fund futures and overnight swaps showing the probability of three quarter-percent cuts this year rising to near certainty. Now, to be fair, the breakdown of the SEP’s rate forecasts shows an optimistic outlook for growth while the ‘blue dots’ indicated beyond the median vote that 8 members expected cuts and 7 of those assumed two 25bp moves. It would not be difficult to tip that balance should the economy start to flag more seriously. While capital markets are holding relatively steady through this disparity (and the Dollar has finally started to show the risk of lower returns and the economic state that would necessitate the response some deference), the divergent paths these forecasts represent are extreme and necessitate a convergence. That merging of views will come with significant market response whether it is speculative enthusiasm closing the gap to the central bank’s forecasts or vice versa. Given the nature of speculation, we will be left with a state of hypervigilance around data and rhetoric from Fed officials that reinforces the market’s skepticism or contradicts it. There are many prepared speeches among various members scheduled this week. That is likely on purpose as members make an effort to reinforce forward guidance. The members more on the extremes of the policy curve will be important to watch but the centrists and Chairman Powell’s scheduled speech are arguably the most important. On the data side, the Fed’s favorite inflation indicator, the PCE deflator, is due. Keep tabs on forecasts for Fed intent, because the record high from the S&P 500 that encouraged other risk assets higher, has drawn much of its lift from favorable US monetary policy. My Greatest Concerns: Recognizing Monetary Policy’s Bark is Bigger than Its Bite and Trade Wars Turn Into Currency Wars While my greatest fears for the future are ultimately a global recession, financial crisis or the beginning of a global war (much less all three); there are certain intermediary events that are more probable and could more readily usher in those systemically disruptive states. And, as it happens, they relate to both the aforementioned concerns. As chaotic as trade wars seem to be through their development and potential risk to the norm, they are at least conducted in measured and definable steps. The Trump administration has signaled its intent and indicated the criteria for which would trigger further escalation or a walk back of existing burdens. The other countries engaging the US or other global players have done the same. It is true that the decisions to intensify or cool the fight have been flippant at times, but it seems to always followed a clear lines of tactics and escalation. This is not the same pace that is employed when the fight shifts to exchange rates. The world’s largest central banks had to cut their rates to near zero and inject the system with extraordinary amounts of stimulus in order to make [an unprecedented climb in capital markets] happen Currency wars are inherently messy. They can confer significant economic benefit to those employing the tactics and detriment to all others. There is significant disagreement as to what constitutes a country pursuing this unfair line of policy which leads to fights out of sheer misunderstanding. And, ultimately, there is tendency for a retaliatory policy to escalate rapidly. We haven’t seen many genuine claims of currency manipulation over the past few decades, but the Japanese authorities were forced to quickly backtrack on a ‘misstatement’ and the Chinese Yuan has a permanent question mark next to it. That said, with trade wars underway and the US President not shy of labeling China’s and Europe’s currencies unfairly devalued, it seems risks now are far higher than they’ve been in generations. It is difficult to pull up from a currency war, and evidence shows these are not the leaders that are likely to let cool heads prevail. The other escalation that plagues my fears is: what happens should the markets develop an unshakable sense of skepticism around central banks’ ability to maintain control? The past 10 years has enjoyed an unprecedented climb in capital markets and underwhelming average pace of expansion. The world’s largest central banks had to cut their rates to near zero and inject the system with extraordinary amounts of stimulus in order to make that happen. While we have long ago restored record highs for the likes of the Dow and seen GDP stabilize in expansionary territory, most of the banks kept going. The reasoning was that either the extreme support was needed to keep the peace or it was worth it to leverage just a little more growth. Regardless of the justification, it meant that there was very little effort to re-stockpile policy ammunition for any future troubles. Now, as pressure seems to be building up once again, the markets are clearly looking to the Fed, ECB, BOJ and others to head off crises. If we were to reasonably evaluate what happens in the scenario where we face another slump, there should be little confidence that monetary policy could truly hold back the tide. That said, limitations for future troubles will start to trace back to an assessment of the current structure’s ability to keep the stability we currently enjoy. If central bank credibility were to truly falter, the fallout would be severe -all the more for the fact that it would commence from record high prices (with arguably a record gap to value).
  25. 1 point
    Overnight action: Wall Street equities closed effectively flat, while bond yields climbed, commodities generally lifted, and currency markets shuffled into place, as markets continue to position for this week’s massive G20 meeting in Osaka. Market activity was relatively high, and sentiment does seem to be balancing on a knife’s edge: US President Trump flippantly suggested his “Plan B” from this weekend’s trade-talks is to slap on China “billions and billions” of more tariffs. Meanwhile, bond markets continued unwind bets of a double-rate-cut from the Fed next month, after some sobering commentary from several Fed-speakers this week, driving US Treasury yields up around 6-points across the curve. FICCC: Fixed-Income, Currencies, Commodities and Crypto: The price action in bond markets could also be attributable a swift-rally in oil prices last night, consequent to the release of US Crude Oil inventory data, which showed a much bigger than expected drawdown last week. That dynamic has sustained the retracement in gold prices, as inflation and central-bank-easing worries diminish. For all the shuffling in bonds and stocks, in currencies: growth currencies like the CAD, NZD and AUD are higher, mostly at the expense of the JPY and CHF. And Bitcoin is going on a tear, breaking through $US13,000 overnight – though tumbling in early trade this morning as choppiness sets into that market. ASX200 consolidates: The ASX200 continued to trade sideways during yesterday’s session, as the market shows signs of slowing upside momentum, and a touch of consolidation. It was a high activity day, which saw the ASX200 shed -0.26 per cent, again due primarily to a dip in bank shares, which lopped 9-points from the index. Much like the position it was in last week, price action points to a market not yet ready to retrace its recent gains. Instead, it’s trading more or less side-ways, if not with a slight bearish bias, as traders position for the many unknowns awaiting them at this weekend’s G20 meeting. RBNZ keeps rates on hold: The Reserve Bank of New Zealand met yesterday, and kept interest rates on hold at 1.50%, as was generally tipped. Naturally, the focus shifted to the RBNZ’s accompanying statement, following the publishing of the decision. And what was revealed cast the central bank’s decision in a light that could be described as a “dovish-hold”. The communication to the market was plain and simple: “The Official Cash Rate (OCR) remains at 1.5 percent. Given the weaker global economic outlook and the risk of ongoing subdued domestic growth, a lower OCR may be needed over time to continue to meet our objectives.” RBNZ to play it by ear: Despite the tone struck by the RBNZ, the Kiwi Dollar lifted somewhat, and rate-cut expectations were slightly unwound, following yesterday’s rates-decision. It would seem the market read what was stated by the bank as being a trifle ambiguous: yes, interest rate cuts are likely needed to support the New Zealand economy in the near-enough future, but when that happens precisely remains uncertain. An August rate cut from the RBNZ is still considered likely, it must be said. But the probabilities have been diminished, with future employment and inflation figures – the indicators the RBNZ flagged as facing downside risks – now taking on greater significance. US GDP data: The economic calendar today will be highlighted by the Final US GDP print for the quarter. It’s the last revision to the US growth data for the quarter, so already, in the market there is a fairly good feel for what the numbers may reveal. It’s expected to come-in at what is quite a robust 3.1 per cent – above trend, in line with the preliminary estimate, and only down 0.1 per cent from last quarter. Naturally, the minutiae is what market participants will be perusing, to get a feel on the trends evolving in the US economy – especially given its assumed slow down. The Fed is treading carefully: The implications for markets from tonight’s US growth figures will, of course, begin with what it says about the US Federal Reserve’s monetary policy considerations. Right now, interest rate markets are implying a relatively high chance that the Fed will pull-out a big 50-point rate cut at that central banks July 31st meeting. The consequences of that have been huge: it’s pushed financial capital into stock markets, tighten credit spreads, and whacked the US Dollar down. And that’s seemingly captured the Fed’s attention, too, with several Fed-speakers this week moving to deftly temper these expectations, given their impact on financial markets. Written by Kyle Rodda-IG Australia
  26. 1 point
    Other central bankers throw their weight around: After the US Fed exited the ring yesterday, some of the world’s other heavyweight central-bankers weighed-in on the global race-to-the-bottom for global interest rates. The BOJ met yesterday, and though they kept their policy entirely untouched, it Governor Haruhiko Kuroda affirmed his commitment to monetary stimulus if necessary. RBA Governor Philip Lowe also delivered a speech, in which he was explicit in his belief that lower interest rates were necessary to absorb “spare capacity” in the labour market”. And the Bank of England met last night, left interest rates on hold, but downgraded its forward-outlook, prompting increased bets of a rate-cut from the BOE this year. Notable price action: Risk assets rallied, while sovereign bond yields fell, the USD tumbled, and gold spiked as a result of the dynamic. The S&P500 touched all-time highs, and the ASX200 registered its own 11-year highs, as the prospect of easy-money the world-over whet investors risk-appetite – though SPI futures this morning a suggesting that enthusiasm will cool on the ASX, with ASX200 looking at a flat open. It wasn’t all smooth sailing it must be said. Nerves were rattled on news that Iran had shot down a US drone over the Straight Hormuz, causing a spike in oil prices on fears of conflict in the region. Rio saps some of the positivity from the market: The materials sector failed to capitalize fully on yesterday’s Fed induced bullishness. The responsibility for this laid at the feet of Rio Tinto, after the heavily-weighted mining-giant announced a paring-back of its iron ore output forecasts, owing to “mine operational challenges” being experienced by the company at a key mine in the Pilbara region. The news sent Rio shares down by over 4 per cent at stages yesterday; and, perhaps ironically, gave a little lift to iron ore prices, which had been showing signs of potential weakness, following the announcement by miner Vale that it would be re-opening one of its largest Brazilian mines. Australian rates keep falling: The increasing prospect of looser global monetary conditions, as well the dovish commentary from our own central bank Governor, worked its way into Australian rates markets yesterday. Bets for rate cuts from the RBA lifted modestly, with the implied probability of rate cuts for next month jumping to around 70 per cent, with 2-full cuts from the RBA before year-end priced in their entirety, right now. This sparked significant moves at the front end of the AGB yield curve: the rate-sensitive three-year note fell by another 4 basis points, to clock a fresh all-time low of 0.91 per cent. AUD pops courtesy of weaker USD: Despite this, the AUD tested life above the 0.6900-handle yesterday, as an even hastier fall in US Treasury yields enervated the US Dollar. An ominous milestone: the yield on the benchmark US 10 Year note fell below 2 per cent for the first time in more than two-and-a-half years, while the yield on the US 2 Year note dipped to around 1.73 percent. The fall in US yields at the front end of the curve narrowed the spread between US Treasuries and it Australian equivalent to around 78-basis points (briefly), and has underpinned the little rally witnessed in the Aussie Dollar in the last 24 hours. Gold hits new highs: Arguably, the greatest beneficiary of this week’s concertedly dovish stance from global central bankers has been gold. The price of the yellow-metal hit a 5-and-a-half year high yesterday, as the USD tipped-over, and global interest rates fell. Importantly, too, from a technical basis, the gold price punctured resistance around $US1360, and came close to hitting the key psychological level of $US1400.00. Though the broader narrative is supportive for gold, the price action is looking somewhat exuberant now: the daily RSI is giving an overbought signal, and the price is divorcing itself from fixed-income markets slightly, suggesting that speculative flow has seized control of the price. The latest readings on global growth: Attention will turn back to the global growth outlook today, ahead of tonight’s release of European Manufacturing PMI data. Markets are expecting another contractionary print in the key German and Europe-wide readings of the data, as the US-China trade-war, along with the continents ongoing structural issues, weigh on Europe’s economic activity. The Euro will be in focus around tonight’s data: markets are warming towards the prospect of rate-cuts from the ECB. A deteriorating outlook for the German and European economies could increase these bets, and sap the shared currency; while a better than expected print would likely fuel its recent pop higher. Written by Kyle Rodda - IG Australia
  27. 1 point
    The tariffs get hiked: The latest round of trade talks didn’t have the desired outcome. But nevertheless, the always forward-looking equity market closed last week on something of a high-note. It was a choppy day’s trade in Asia as the news filtered through that an agreement between the US and China in Washington wouldn’t be reached. Ultimately though, and just like the last time tariffs were hiked, financial markets handled the news with aplomb. The simplest explanation for why there wasn’t a huge reaction financial markets is roughly this: it “was buy the news and sell the fact” with markets having already discounted a trade-war escalation. Markets (probably) saw it coming: It’s an unhelpful cliché, that one. However, market-moves, ex-post or not, are often chalked up to such a dynamic. It’s one of those helpful mental models to make sense of the madness of financial markets day-to-day. Regardless, it’s ostensibly what financial markets have done in this instance; giving solace to the bulls and bolstering risk-appetite. Fundamentally, the global equity map was a rich-shade of green after the end of Friday’s trade. The S&P500, for one, closed 0.37 per cent higher, CSI300 lifted a remarkable 3.63 per cent, and SPI Futures are indicating a 29 point jump this morning. The future feels more uncertain: The question moves today to: where to from here? From a pure fundamentalists point of view, those folks probably just wait to see how new trade-barriers show up in the hard-data. That one is probably going to be a slow-burn. Recall, after the last round of tariffs were implemented, it took the better part of a quarter for them to show in the data, and vaguely reflect in market fundamentals. For the short-term sentiment watchers, an answer to that overriding question will be more immediate, however perhaps more gradual in its unfolding. Afterall, this is a headline driven market, and those headlines are still being produced. Trade will remain “headline-driven”: Hence, on the headline front, what was received over the weekend – after the market had closed – was probably not all that favourable for risk-sentiment. While Friday’s trade was buoyed by news that trade-talks were continuing and were “constructive”; trade at the very early stages of this week is being stifled by the harsh rhetoric from the Trump administration, towards the Chinese, over the weekend. Upping his binary “winner-and-losers” language, news has filtered through the wires that the US has delivered China an ultimatum: make-a-deal, or tariffs get applied to all Chinese goods going into the US in a month’s time. Higher trade-barriers to stifle global growth: The reliability of this story is somewhat questionable. Regardless, if tariffs are applied to all goods going into the US from China, and retaliatory tariffs are proportionately applied to all goods going into China from the US, then the global economy will almost certainly suffer. Speculation now in financial markets will probably centre in a big-way on trying to quantify the impact of this dynamic. This will take some time to actually materialize. But you can bet the quants and other data crunchers of the world will be adjusting their models to try and predict their impact now. US-China conflict possibly the “new-normal”: For traders not-so resource rich, the matter becomes less about predicting the numbers, and more about getting a rational grasp on whether the trade-war will continue to escalate. Given the current circumstances, a bitter spoonful of pessimism may well be the conclusion. That’s because the trade-war, as has been repeated ad nauseum in the punditry, is not an economic issue, but a strategic one. To borrow from the classics, it’s a case of Thucydides-trap. China does not wish to compromise its inexorable rise; while the US is trying to force China to rise within the restrictive confines of the world-order it, itself created. The consequences of this new order: The intractability of such an issue means that, at the very least intellectually, a true resolution to the trade-war in the short-term in unlikely. Tariffs may come and go, but financial markets will have to deal with a world in the future where its two biggest economies are “at each other’s throats”. This new reality will probably be internalized by markets, which will move-on over time, and trade according to the market-fundamentals, determined by economic and corporate strength. However, as the economic cycle continues towards its end, the interest will be in how weaker global-trade steepens its descent, and compromises the markets’ fundamentals. Written by Kyle Rodda - IG Australia
  28. 1 point
    Why your feedback matters Here at IG we want to make sure your suggestions help shape our direction and future. We appreciate that the best businesses are built around two-way communication with clients. That's why we provide a number of different ways for clients to quickly and easily talk to us. There is nothing worse than submitting feedback and feeling like your comments and suggestions have been jettisoned into the void of some unread inbox. We want to take this opportunity to lay out how you can easily submit feedback, a few things we do on a daily basis with those communications, and finally a few recent instances of how we're reacted to things our clients have told us. How to submit feedback to IG Dealing Platform: If you're logged into the platform you'll notice a 'quick feedback' option in the top right hand corner under 'Help'. When you submit your comments our systems will automatically book that against your account and file it in a report which we periodically collate and send to the relevant parties. Community: One of the easiest ways to submit feedback is via the IG Community. If you head over to the forums page you'll notice a 'Suggestions' section where you can have a search to see if your idea has been submitted before. If it hasn't you can simply start a new topic, pop in your request, and post it publically on Community. The best thing about this being public is that if other clients are also looking for the same thing, they can up vote your suggestion or add a comment. The more clients that want something, the higher the likelihood of it happening. Reports will be collated and passed to the relevant teams. Direct Message: While the methods described above are generally easier, you may sometimes want to send us a direct message. You can check out our Contact Us page to send a message via a browser contact form. A few things we do with your feedback Daily feedback reports: When a feedback item comes into our client facing trading services team we first see if any immediate action is required (e.g. if there is an easy resolution or different way to get the same desired result). We then tag the contact with a 'feedback' tag. All items tagged in this way are collated daily and sent to the appropriate business owners. Staff with various specialisms, from those who deal with user experience to our charting developers and data scientists, receive these reports. Steering committees: Client feedback is also fed directly back to the appropriate areas within the business via meetings set up to decide the rollout roadmap for specific products. We also regularly meet with third party vendors such as Pro Real Time or Signal providers to discuss feedback points and figure out how to resolve any client pain points. Client communication meetings: Every couple of weeks our communication teams meet with client-facing managers. Both trading services and our dealing desk give an update regarding inbound contacts and the wider market movements, and any client feedback (direct or implied) is discussed. Examples of recent changes due to client feedback All-sessions chart data: A pain point for clients was the bad spikes on all session pre-market data for big stocks like Apple, Amazon etc. A working group including representatives from the shares desk, our trading services technical support team, and pricing, implemented some solutions to filter the bad data, and correct historical data. Almost all chart updates on the new platform: The charts roadmap is strongly influenced by client feedback. Things like customisable colours, new drawings, extra Fibonacci levels, and features like the dark theme, have all been implemented thanks to feedback from our clients. PRT Wizards: We get a lot of clients telling us that using Pro Real Time for the first time can be quite difficult because of the flexibility, complexity, and customisation options of the charts. Pro Real Time has now implemented walkthrough wizards to guide clients through using PRT for the first time (and for specific features like customising deal templates). Keep an eye out for product updates Not every suggestion we receive can be implemented as we need to balance the business roadmap with client feedback and requests, but every feedback item will be documented and reviewed by the appropriate team. We also have a brand new 'Products Update' blog on Community where we will be updating all clients on recent rollouts and additions to the IG platform. Some of these changes will be implemented as a direct result of your feedback, so please make sure you keep your comments coming using the above methods. All the best IG Community Moderator Team
  29. 1 point
    Turning on FX swap bid/offer When trading currency pairs, if a position is held through 10pm GMT, it will incur an overnight funding charge. This charge is based on the interest rate differential between the two currencies in the pair, where you receive interest in the currency you buy and pay interest on the currency you sell. Swap rates also apply to cryptocurrencies and spot gold, silver, platinum or palladium. Based on client feedback we have now added these overnight funding charges to the platform. Please keep in mind that they are indicative figures. These swap rates are viewed from a watchlist. Once you have an FX pair on the watchlist, by clicking on the three lines that are positioned on the left-hand corner next to the word 'market', a drop down of columns will appear. Click on the swap bid and swap offer buttons to activate them. What does this mean for me? If GBPUSD was quoted as 0.22 / -0.85 then the 0.22 would be what you receive if you are short, and the 0.85 would be what you pay if you are long. You then need to do the trade size times this value. For example a spread bet of £3/pt on the short trade would result in a credit to your account of 66p (which comes from 0.22 x £3). If you have a CFD account and you're holding a single $10 contract long, you would pay $8.50 per night (which comes from 1 contract x $10 x 0.85). Where does this figure come from? The figure is shown in points and depending on the currency you hold and the direction of your trade you can either earn or pay a premium, keeping in mind that there is an IG charge included in the calculation. Currently this is 0.3% (or 0.8% for mini contracts and spread bets) however as this is subject to change please check IG.com for the latest fees. If you are long on a currency pair, you will need to focus on the swap offer, and if you are short you will focus on the swap bid. If the swap is a positive number, you will be credited, because the interest rate on the currency you are buying is higher than the interest rate on the currency you are selling. If the rate is a negative number you will be charged, because the interest rate on the currency you are buying is lower than the interest rate on the currency you are selling. If the interest rate on the euro is 0.25% and the interest rate on the USD is 2.75% and you buy EURUSD, you will be receiving 0.25% but paying 2.75%, and will be left with an interest rate differential of 2.5 points (excluding the IG change). Example: Let us take EURUSD as a worked example. We will need two figures for our calculation, the underlying market swap rate (known as the Tom/Next rate, which is provided by the banks), as well as the current spot rate of the currency pair at 10pm. The below figures are indicative for this calculation. An example of the underlying 'Tom/Next' rate for EURUSD: 0.34 / 0.39 An example of today's Spot FX rate for EURUSD at 10pm UK time: 1.0650 An example IG admin fee of 0.3% which is subject to change (please find the most up to date admin fees on IG.com) Once we have the Tom/Next rate, we take the 10pm EURUSD spot rate (in points) and multiply by IG's charge of 0.3% (or 0.8% for CFD mini or Spread Betting deal), which is then divided by 360 days to get an overnight value. = (10650 x 0.3%) / 360 = 31.95 / 360 = 0.08875 This is then applied to the underlying market quote of 0.34 / 0.39 Bid = 0.34 - 0.08875 = 0.25125 = 0.25 Offer = 0.39 + 0.08875 = 0.47875 = 0.48 This then gives us our overnight funding rate, inclusive of IG charge, of 0.25 / - 0.48. The '˜Offer' is negative, because currently there is a higher interest rate on USD than there is on EUR. Therefore, buying the pair would leave you paying a larger USD interest vs receiving a smaller EUR interest. E.g. If you were long one main lot, you would do 'Number of Contracts x Contract Size x Tom Next Rate'. Using the information above, if you were long one main lot, your 'Daily FX Interest' would be: 1 x $10 x - 0.48 = $4.80 charge per night. (Conversely if you were short, you would receive $2.50 per night). Important factors to note FX settlement of T+2 means that if you hold your trade through 10pm Wednesday (UK Time) then you'll need to incorporate the weekend into the calculation, and therefore you'll have an 'FX Interest Charge' of 3 days. This is because currency can't settle at the weekend, and the new spot rate would therefore fall on a Monday. It also follows that if you hold through 10pm on a Friday, you only receive a 1 day charge (even though you have to hold through three days before you can close the position). Settlement of FX can't take place on public holidays. Therefore, over periods such as Christmas or Easter, or public holidays such as Martin Luther King Day or Thanksgiving, you may see interest charges for a variable number of days. Some currencies trade on a T+1 basis, most notably USDCAD, USDTRY and USDRUB.
  30. 1 point
    US-China trade talks have restarted in Beijing as U.S. Treasury Secretary Steven Mnuchin said on Friday that he had a "productive working dinner" the previous night. Investors are hopeful that progress will be made to resolve the bitter trade dispute between the two largest global economies, amid growing concern of a slowing economy as the bond market signals a possible incoming recession. Theresa May is set to make a third attempt to pass a Brexit deal today, as the MPs are asked to vote for a "blindfold Brexit" on the day that Britain was originally due to exit the EU. The format for today's vote has been crucially changed to comply with Speaker John Bercow's recent ruling, so that MPs will vote only to approve the withdrawal treaty and not the 26-page political declaration that accompanies it. Huawei's revenue and profits soar, despite recent major political headwinds. The Chinese tech giant reported revenue of over $100 billion in 2018, a 19.5% year-on-year rise. Net profit also rose 25% compared to 2017. The Dow Jones rose 91.87 points to 25,717.46, whilst the S&P gained 0.4% and the Nasdaq advanced 0.3% to close at 7,669.17. Asian equities followed suit as the Shanghai Composite rose more than 3.1% and Japan's Nikkei climbed 0.8% on Friday. In the currency market, the pound regained 0.3% to $1.3077 after losing more than 1% the previous day. The euro stands steady at $1.1232 and the Turkish lira dropped 1%, after it had plunged 4% the day before. U.S. crude futures traded up 0.4% at $59.55 a barrel, recovering from Thursday's low of $58.20. Palladium dropped 0.4% after seeing declines of 6.6% yesterday. The precious metal has fallen from last week's peak on concerns that demand could be affected by an economic slowdown. Asian overnight: Chinese markets were the big outperformer in a widely bullish session, with the Shenzhen composite trading 3.7% higher amid hopes for a breakthrough in US-China trade talks. Yesterday’s comments out of the US point towards widespread progress for these talks, raising the prospect of an eventual deal. Overnight data all focused in on Japan, where a slightly weaker retail sales number marked the one blot on an otherwise impressive set of data. Improved housing starts, industrial production, and unemployment helped boost confidence in the economy. UK, US and Europe: Looking ahead, Theresa May gets a third bite of the cherry, with another meaningful vote taking place today. The failure to secure support from the DUP should consign this attempt to another loss, yet some believe that the decision to split the withdrawal agreement from the political declaration could help secure some extra votes. It is a busy morning otherwise for the pound, with final GDP, current account, net lending, mortgage approvals, and the Nationwide HPI all released at 9.30am. In the afternoon, keep an eye out for Canadian monthly GDP, alongside the US core PCE price index, personal spending, and Chicago PMI. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 8.55am – German unemployment (March): rate to hold at 5%. Markets to watch: EUR crosses 9.30am – UK GDP (Q4, final): growth expected to be 1.3% YoY and 0.2% QoQ. Markets to watch: GBP crosses 12.30pm – US personal income (February): forecast to grow 0.2% MoM. Markets to watch: US indices, USD crosses 1.45pm – Chicago PMI (March): expected to fall to 57 from 64.7. Markets to watch: US indices, USD crosses 2pm – US pending home sales (February): expected to rise 1.6% MoM. Markets to watch: USD crosses TBD - Parliament Brexit Vote Corporate News, Upgrades and Downgrades Renewi has cut 2020 guidance, and will also cut its dividend, after it was hit by new regulations in the Netherlands for soil treatment. Operating earnings for the year to March 2020 are expected to fall by €25 million. Travis Perkins said that its CEO John Carter would stand down in August. He will be replaced by Atkins CEO Nick Roberts. Bowleven has reported a drop in pre-tax losses for 2018, to $1.4 million, from $2.8 million a year earlier. Efforts to cut spending have borne fruit, helping to cut administration expenditure to $2.1 million from $3.6 million in the previous year. Wells Fargo shares jumped 2.6% in after hours trading on Thursday, following an announcement that CEO Tim Sloan will be retiring. AstraZeneza has struck a $6.9bn deal with Japan's Daiichi Sankyo to develop and sell a new cancer drug that is expected to treat breast and gastric cancers. Partners Group raised to overweight at Morgan Stanley Boskalis downgraded to add at AlphaValue Evraz downgraded to neutral at Citi Tele2 downgraded to hold at Berenberg Maersk downgraded to add at AlphaValue IGTV featured video 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.
  31. 1 point
    On the back of client feedback and to make the platform easier to navigate, we have now made the ‘show’ button easier to find by adding the toggle to the top of the charts. By clicking this button, you will be able to customize the information that appears on your charts. These functionalities were previously available by right clicking on the graph, however due to significant and continued client use they’re now only one click away. Graph features you can add: HLOC: By enabling HLOC data you will be able to see the high, low, open and close prices by hovering over a candlestick on your chart. Drawings: The drawings button will enable you to see or hide any drawing you may have set up. This button will make it easier to work with drawings, as you can hide them all at the same time without having to discard each drawing individually. Indicators: As like with drawings, this button will make it easier to hide all indicators that are selected, without having to delete each indicator individually. Open positions: By enabling open positions on your chart, you will see a line displaying your open position(s) and the level at which it was open. Working orders: Enabling working orders will allow you to see any working orders you may have set up for that market as a line along its trigger price. Position preview: Enabling position preview will allow you to see a visual representation of your trade on the graph as you fill in the deal ticket. You can visit this link to find out more about deal position preview. Timeline: Enabling the timeline will allow you to see, at the bottom of the graph, the range of dates selected to appear on the graph. Price changes: Enabling price changes will show the absolute change, the percentage change, the high, the low and the time frame to which it applies; all shown at the bottom of the graph. Price line: Enabling price line will show a line across the graph where the current price is.
  32. 1 point
    Theresa May's government holds onto power, winning a no-confidence vote in parliament last night by 325 votes to 306. The Prime Minister has now set out to reach a cross-party solution for Brexit, although this will be extremely difficult as the PM was snubbed by the leader of the opposition last night saying that she is in charge of a "zombie government". Sterling remained steady as the currency traded around the 1.2875 mark against the dollar after, as expected, Mrs May's government won the vote of no-confidence. US equities closed higher on Wednesday after strong quarterly earnings by Bank of America and Goldman. The S&P 500 rose by 0.2% whilst the Dow increased by 140 points, both driven by the financial sector. The Nasdaq followed and increased by 0.15%. Stock markets in Asia were mixed as concerns continue over rising tensions between the US and China. Japan's Topix gained 0.4% at the close, followed by the MSCI Asia Pacific Index which added 0.1%. On the other side of this, the Shanghai Composite and the Hang Seng both slid by 0.1%. Oil slipped 0.5% down to near $52 per barrel as the US reach record output levels, counter-acting the signs of shrinking supply by OPEC+. Gold traded slightly lower at $1,291.65 per ounce. UK, US and Europe: Calls from the opposition and some leading Brexiteers for the Prime Minister to resign seems to have fallen on deaf ears. Last night, Theresa May's government survived a vote of no confidence tabled by Jeremy Corbyn, winning the vote by 325 to 306. It's unclear what is going to happen next in these extraordinary circumstances. Mrs May will seek further concessions from the EU in an attempt to get her 'Plan B' deal through the House of Commons, which the PM must layout to parliament next week. Looking ahead, earnings season continues with Netflix, Morgan Stanley and Taiwan Semiconductor posting results later today. It's unclear what is going to happen next in these extraordinary circumstances... South Africa: Last night saw US markets trading in positive territory led by gains within the banking sector after The Bank Of America reported better than expected earnings. Asian markets and US Index futures are however trading lower this morning tempering the previous days gains somewhat. Last night saw British Prime Minister Theresa May surviving a vote of no confidence in parliament, helping restore some stability in the British Pound. Oil and precious metal prices are trading modestly lower this morning, while base metals are trading positive on the day. Tencent Holdings is up 0.8% in Australia, suggestive of a similar start for major holding company Naspers. BHP Billiton is down 0.2% in Australia suggestive of a slightly weaker start for locally listed diversified resource counters. The South African Reserve Bank (SARB) concludes its monetary policy meeting today where no change in lending rates is the expected outcome. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Primark announce this morning that like-for-like sales fell in the 16 weeks to the 5th of January caused by reduced footfall during November, according to the retailer. Fiserv is set to acquire payment processor First Data in a deal worth $22 billion in one of the largest deals we have seen in the financial technology industry. Bank of America shares soared by 7% yesterday after quarterly profit reached a record level of $7.3 billion. Goldman Sachs also beat expectations yesterday as earnings per share reached $6.05, beating estimates of $4.53, and posting revenue of $8.08 billion for the quarter. In a statement, CEO David Solomon said "We are pleased with our performance for the year, achieving strong top and bottom line results despite a challenging backdrop for our market-making businesses in the second half". Asset manager firm BlackRock profits fell short of expectations as the company's assets under management has fallen 5% over the last 12 months down to $5.98 trillion. IGTV featured video 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.
  33. 1 point
    Continuing our #IGCommodityChat and following our previous chat on gold, join us on Thursday the 29 November at 1pm (UK time) to discuss the future of the oil market with industry advisor Malcolm Graham-Wood and Spencer Welch, director of oil markets at IHS Markit. Submit your questions now or during the live show Use the comments section at the bottom of the blog (even if you're not an IG client or not logged in) and we'll put them to the panel. If there are any questions which we don't get to in the live show our senior sales traders will look to get you an answer and continue the discussion. We'll also look to answer questions posted here. UPDATE at 13.01: minor technical issues will cause a delay with the start of the stream. I will update when we're live. UPDATE at 13.07: This is now live on the platform only. We'll push to Community afterwards. UPDATE at 14.10: The live show is now accessible above. With so much uncertainty surrounding the future of the oil market, we’ll be taking a look at how the industry changes might influence the price of oil. You can watch the live stream at 1pm (UK time) via the trading platform.
  34. 1 point
    Theresa May´s cabinet is set to meet today in order to try and find a solution to the Irish border crisis, the main headache for Brexit talks in the last few months. As a result of the uncertainty regarding a Brexit deal, the GBP weakened against its major pairs, falling by almost 1% against the US dollar and 0.2%against the Euro. The Dow Jones lost 2.32% on Monday falling by 602 points to close at 25,387.18, after Apple suffer another hit and worries over global trade continue. The Nasdaq re-enters correction territory as it lost 2.8% to close at 7,200.87. Goldman Sachs shares suffered their biggest loss in 7 years, leading the S&P 500 to drop 2% to close at 2,726.22. The fall comes after the Malaysian finance minister demands a full refund of the $600million fees they paid To GS in order to help set up the fraudulent state investment fund 1MDB. Cigarette shares dip on Monday as the US Food and Drug Administration (FDA) consider banning menthol cigarettes. The fall was led by British American Tobacco that lost almost 11% closing at 2.962,50 as investors fear over the future of the newly acquired US menthol brand Newport. A smaller than expected demand for vaping products has also led to the company´s revenues to miss targets for the year so far. Italy has reached its deadline to submit a revised budget draft to the EU but, despite pressure from Brussels, Italy shows little signs of altering its budget as it targets to boost government spending. Because of this, Italian bond years rose again on Monday, increasing between 1.3% and 3.5% across the curve. Asian markets start the day in the negative territory but seem to recover into the afternoon. The Hang Seng dipped to 25,092 at the open but has recovered in the afternoon trading above Monday's closing price. The Nikkei 225 has been trading at a 2% loss from the previous close whilst the ASX 200 is ending the day 1.8% lower. Airline stocks have been hurt after the OPEC cartel announce they are looking to stabilise oil prices by reducing supply after prices have fallen around 20% in the last month. International Consolidated Airlines (IAG) closed 0,9% lower on Monday at 637,60. Asian overnight: Asian markets followed their US counterparts lower overnight, with a sharp deterioration in Apple shares sending tech stocks lower in markets such as the Topix, ASX 200, and South Korean Kospi composite. This came after two of Apple’s suppliers cut their earnings forecasts, causing markets to worry whether iPhone sales had peaked UK, US and Europe: The Pound has had a tough start to the week as the markets start to factor in the possibility of a “no deal” Brexit. As it is becoming increasingly possible that Theresa May is not going to be able to pass a deal in Parliament before the deadline on March 29th, the pound is starting to come under pressure against major currencies such as the Euro and the US Dollar. We can expect the Pound to trade with increased volatility this week as key meetings will shape whether there is a possibility of a Brexit deal to fit all. The Brexit negotiations have come under heat as Theresa May has tried to create a UK customs union in order to avoid a hard border on the Island of Ireland. But the EU has rejected this idea by enforcing the backstop plans which lock in the UK in a relationship with the EU which cannot be ended without the EU´s permission. We can expect the Pound to trade with increased volatility this week as key meetings will shape whether there is a possibility of a Brexit deal to fit all. After the recovery from the 2008 financial crisis, the stock markets have been performing seemingly well keeping a consistent uptrend throughout the years but the trading activity of the last month have left investors worried over the health of the financial systems. As earnings have been consistently increasing and companies are performing well, there have been talks about how long this sustained growth can last, questioning if the markets have reached their boiling point. After October became one of the worst trading months in years, the month of November had seemed to bring some relief to stock markets, but after Monday's sharp decline it shows that the markets remain volatile. All it took was bad production figure for Apple and possible regulatory action against Goldman Sachs to send the stock market into a downfall. As the potential for a slow down in economic growth and earnings is starting to take place amid ongoing trade wars and rising interest rates, investors are advising clients to remain cautious and reduce the amount of risk by diversifying their portfolios in order to be prepared for the months to come. Looking ahead, UK jobs data provides a focus on the pound, with average earnings expected to rise sharply to a three-year high of 3%. Also keep an eye out for the German ZEW economic sentiment survey, coming in a week that is expected to see the German Q3 GDP reading hit negative territory. Economic calendar - key events and forecast (times in GMT) Source: Daily FX Economic Calendar 9.30am – UK employment data: claimant count to rise by 3200 from 18,500 in October, while unemployment rate holds at 4%, and average hourly earnings rise 2.6% in September. Market to watch: GBP crosses 10am – German ZEW (November): economic sentiment to rise to -12 from -24.7. Market to watch: EUR crosses 11.30pm – Australia Westpac consumer confidence (November): index to rise to 103 from 101.5. Market to watch: AUD crosses 11.50pm – Japan GDP (Q3, preliminary): forecast to be -0.3% QoQ from 0.7%. Market to watch: JPY crosses Corporate News, Upgrades and Downgrades Taylor Wimpey said that sales rates grew in the second half, up to 0.77 from 0.71 a year earlier. The current order book was up 9% over the year, to £2.4 billion. Vodafone suffered a loss of €7.83 billion for the first half, arising from the disposal of Vodafone India, higher financing costs and de-recognition of a deferred tax asset in Spain. Experian suffered a 5% drop in pre-tax profit to $470 million for the first half, while revenue rose 7% to $2.36 billion. Allied Minds upgraded to buy at Jefferies Anglo American raised to hold at Global Mining Research Zurich Airport upgraded to hold at Santander Total upgraded to buy at AlphaValue IP Group downgraded to hold at Jefferies ThyssenKrupp downgraded to hold at Bankhaus Lampe Orpea downgraded to neutral at Credit Suisse Sophos downgraded to hold at Shore Capital IGTV featured video 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.
  35. 1 point
    Written by Kyle Rodda - IG Australia The fallout: The US mid-terms have passed, and while there were signs throughout yesterday's trade that the vote would throw up a few curly situations, the outcome fell broadly in line with market expectations. The VIX has dropped and US equities, paced by the NASDAQ, have subsequently rallied, primarily on the knowledge that everything went according to plan -- proving the notion that the biggest drag in markets all-in-all is uncertainty. There are enumerable possibilities, all with various implications for traders, opened-up by yesterday's result, and one assumes that they'll be digested calmly by market participants in the times ahead. Ultimately, however, one major risk has been navigated through without much bloodshed, allowing traders to return their attention to arguably the more significant, fundamental issues at hand. Gridlock: The term that perhaps has been hurled around most since it was confirmed that the Republicans would hold the US Senate and the Democrats would nick the House of Representatives is "gridlock". In the so-called "age of bipartisanship", a split in power within congress all but assures the adversarial tone of the late-Obama era returns. In a representative democracy, in principle, that need not be cause for concern, but it does imply greater inertia in legislative action. That means Tax Cuts 2.0 (as they've been dubbed) are all but dead, buried and cremated, and that a push for fiscal restraint by the Democrats could complicate issues around budget policy and the national debt ceiling in the future. US bond markets: The possible dynamic has shown up in prices already. An analysis of the US Treasury yield curve reveals this. The fact yesterday's results ensure a possibly stagnant congress has been interpreted as a continuation of the status quo in the short term. The yield on interest rate sensitive US 2 Year Treasuries has ticked higher to 2.94 per cent over night on expectations that the current growth formula will go unchanged – and lead to a continuation of the US Federal Reserve's rate-tightening regime. Conversely, the yield on fiscal policy (read: debt and deficit) sensitive US 10 Treasuries has dipped slightly to 3.19 per cent, on the belief that a debt blow-out from Trump's planned tax cuts and infrastructure spending program will not go ahead. Currency markets: The consequence of this shift in expectations regarding US fiscal policy is the US Dollar has sold-off overnight. It appears the interplay of forces is the ideal recipe for a slower rise in the greenback: global growth remains supported in the short-term, benefitting riskier currencies, but lower long-term yields are making the USD relatively less attractive. The knock-on effect has seen the EUR and Pound rally above 1.1450 and 1.3140, supported by strong German industrial output figures last night; and commodity-bloc currencies such as our own Australian Dollar has definitively broken its downward trend to trade at 0.7280. The balance between a weaker greenback but greater risk appetite has kept the USD/JPY flat at 1.1340, while gold has also remained steady at $US1226 per ounce. What for the trade-war? The implications for the other major global macro-risk from yesterday's vote, the US-China trade war, has thus proven a touch unclear. China's equity markets closed lower for the day, the Yuan whipsawed, and prices in growth proxy commodities -- such as copper --fell, seemingly on the uncertainty of what a greater representation of Democrats in Congress means for US foreign policy. In principle, the philosophically liberal-internationalist Democrat party could lobby for greater multilateral engagement with China and other world powers, but in this new age of populism, old assumptions may no longer prove reliable. Futures markets are projecting a better day for the Asian region, however a flicker of greater volatility in Asian markets should be expected leading into the highly anticipated G20 summit at the end of the month. ASX200: SPI futures are indicating a 28-point jump at the open for the ASX200 this morning, as the local market looks to extend its solid gains this week. The day yesterday ended in a 0.4 per cent gain for Australian shares, on reasonably solid breadth of 64 per cent. Volume was below average owing to the major event risk of US mid-term elections once again, however a rotation away from defensive sectors and into growth stocks and cyclicals supported the narrative that the outcome of yesterday’s vote is positive for the equity bull market. The ASX200 now sits on the cusp of technically reversing the short-term trend brought about by October’s massive stock market correction, with a meaningful hold of around 5930 today the level to watch. Today’s major events: Amid all the news and analysis around US mid-terms, a quick refocusing on the week’s other risk-events will emerge in markets today. Of significance today: the RBNZ met this morning – in what is probably the key event for the Asian region – and kept interest rates on hold as expected. The tone struck by the RBNZ has thus far been judged as rather dovish, legging the Kiwi Dollar’s run higher above the 0.6800 handle. Turning attention to more pressing global event-risk, it comes no bigger than tonight’s meeting of the US Federal Reserve. The Fed won’t move rates, that much is known. The attention will be directed instead towards the Fed’s commentary about its flagged December interest rate hike, plus its views on further rate hikes into 2019.
  36. 1 point
    Global stocks rebound after worst month since 2012. Corporate earnings in the US and Europe have helped ease lingering worries over rising interest rates, trade tensions and a slowing global economy. The S&P 500 rose 1.1% and the Nasdaq Composite gained 2%. The Dow is currently trading flat after jumping more than 350 points at yesterday’s open. Asia-Pacific Indices mostly started November on a stronger footing. The Hang Seng was 1.8% higher and Taiwan’s Taiex gained 0.4%, however, Topix was down 0.5% whilst the ASX was roughly flat. The pound sterling rose by almost 0.7% following a report that Theresa May had negotiated an agreement for British financial services companies to maintain continued access to European markets after Brexit. Dominic Raab also predicts a Brexit deal to be made by November 21st. A series of UK economic releases are due today, including: the Manufacturing PMI, a summary of Monetary Policy, and the all important BOE Inflation Report, providing a projection of inflation and economic growth over the next 2 years. The AUD rose 0.95% against the USD after a better than expected trade surplus in September as exports rose and imports fell. AUD/USD currently at 0.714. Turkish Lira drops as the country’s finance minister announced tax cuts that led to doubts over the government’s pledge to take a more disciplined fiscal approach. Brent crude continues its decline, down 0.44% and currently trading at $74.74 a barrel, . Gold is up 0.71% at around $1224 an ounce. Asian overnight: Chinese stocks rose on Thursday on the back of a signalling of a new round of economic stimulus measures by Chinese Communist leaders, in hopes to shore up confidence as the country faces slower growth and the US-China trade war. This comes as an official gauge of Chinese factory output (PMI) weakened to its lowest level in more than two years in October, indicating pressure on the economy. BOE inflation report is set to provide an insight into the bank’s view of economic conditions and inflation... Japanese markets provided the one outlier to an overwhelmingly positive session in China, Hong Kong and Australia. Tax cuts and other stimulus from the Chinese helped boost confidence, while the bullish theme from US and European markets also helped. Rumours of a deal between the UK and EU that would see services firms throughout the UK retain access to European markets has helped provide a boost for the pound. Meanwhile, data-wise we have seen a massive jump in the Australian trade balance, which posted the largest surplus in 18-months. A sharp rise in commodity prices also helped boost Australian stocks and the Australian dollar. UK, US and Europe: There are a few key UK monetary and economic releases to watch out for today. The BOE inflation report is set to provide an insight into the bank’s view of economic conditions and inflation, an outlook for the country’s economic growth which will shape future monetary policy. Mark Carney is due to speak at a press conference at 1:30pm GMT regarding the report – expect volatility around this time. The BOE interest rate will also be released, with a forecast of 0.75%, unchanged from last month’s figure. In the afternoon, keep an eye out for the manufacturing PMI readings from both the US and Canada. On the corporate front, keep an eye out for earnings from Apple as the tech sector comes into focus once again. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 9.30am – UK mfg PMI (October): activity expected to increase in the sector, with the inde rising to 54.6 from 53.8. Markets to watch: GBP crosses 12pm – BoE meeting & inflation report: no change on policy expected, but the inflation report may provide some clues and thus result in some GBP volatility. Markets to watch: GBP crosses 2pm – US ISM mfg PMI (October): index to fall to 59.6 from 59.8. Markets to watch: US indices, USD crosses Corporate News, Upgrades and Downgrades Just Eat has issued a profit warning, saying that earnings will be towards the bottom end of the £165 - £185 million range, due to investments in Latin America, although revenues will be towards the top end of the £740 – 770 million range. Carpetright reported ‘negative’ like-for-like sales for the half year to 31 October, hit by store closures and disruption arising from restructuring. Credit Suisse’s net income for Q3 comes in at 424 million CHF, vs. 449 million expected. Royal Dutch Shell reported an almost 40% rise in Q3 profits, making four-year highs but still short of forecasts. Japanese electronics giant Panasonic saw its share prices drop more than 8% after a report of a 4% fall in half yearly profit. HSBC upgraded to hold at DZ Bank Paradox Interactive raised to buy at SEB Equities Sanofi upgraded to equal-weight at Barclays Securitas upgraded to add at AlphaValue BNP Paribas cut to hold at Independent Research; GBL downgraded to hold at SocGen IMA downgraded to hold at Kepler Cheuvreux Outokumpu downgraded to neutral at Citi IGTV featured video 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.
  37. 1 point
    Written by Kyle Rodda - IG Australia ASX200 yesterday: It was a tale of two halves for the ASX200 yesterday, dipping at the open before roaring back to close the day’s trade 1.3 per cent higher. The dour beginnings came on the back of reports from Bloomberg – now well known – that the Trump Administration would be seeking to slap tariffs on (in effect) all Chinese imports into the US, if a deal couldn’t be achieved between US President Donald Trump and Chinese President Xi Jinping at next month’s G20 Summit. In a testament to the jumpiness of financial markets the world over currently, the tone changed in global markets upon the release of news that, in an interview with Fox News, US President Trump believed there was a “great deal” in the works between the US and China. Sentiment in Asian trade: A highly ambiguous statement. Nevertheless, market participants – clinging onto every shred of hope – took the comments, bound them to their sense of optimism, and ran Asian equity indices generally higher. Breadth on the ASX200 was at a noteworthy 75 per cent, though on volumes slightly below last week’s average, with the major momentum/growth sectors topping the sectoral map. The financials, as is always required, did most of the heavy lifting, adding 30 points to the index, in part in preparation for upcoming company reports from the Big 4. The Australian market has now pulled itself out of oversold levels, to break-trend on the RSI, and in doing so, establishing the foundations for a challenge of a cluster of resistance levels between 5780 and 5880. Corrective bias remains: No doubt, it was a praise-worthy performance from the ASX200, but Australian investors are far from out of the woods yet. Putting aside the major global drivers dictating the fate of equity markets the world over, the simple price action on the ASX200 index doesn’t yet indicate an end to the recent bearish streak. If anything, at least as it currently presents, the technical indicators play into it. The push into oversold levels necessitates a recovery in the ASX, as bargain hunting buyers galvanize a bounce higher. There’s some way to go before a reversal in the recent short-term trend lower can be definitively considered finished. A clean break through 5930 and a solid hold above 5780 would be the categorical sign required before this can be stated. Until then, abandoning a bearish perception of the ASX may well be premature. ASX200 drivers: As if often stated, the overall activity in the ASX200 is determined by an oligopoly of banks, a slew of mining companies, a couple of supermarkets and a much-loved biotechnology firm. The banks have received a leg-up thus far this week, as investors ignore regulatory risk and a property to slowdown to buy in ahead of a series of bank earning’s reports. The miners are being slayed by increased concerns about the impacts of tariffs on global growth, though increased fiscal stimulus from the Chinese and its knock-on effects to iron ore prices could be their salvation. Woolworths and Wesfarmers are performing solidly, though not well enough to carry the entire market higher. While a diminishing appetite for growth/momentum stocks has led to losses of over 5 per cent for market darling CSL over the past 3 months. Global macro and share market trends: Reviewing the fundamental macro forces required to stimulate the market perhaps reinforces the notion that the ASX200 still has some correcting to do. Although equity markets have experienced a relatively strong start to the week, the risks that catalysed the recent correction in segments of the market have not disappeared. Much of the reversal can be attributed to a belief amongst investors that the recent share market volatility will force the US Federal Reserve to soften its hawkishness and increase US interest rates at a slower pace. US Treasury markets reflect this, with the yield on the rate-sensitive US Treasury note falling from +2.90 per cent to as low as 2.81 per cent this week, as traders decrease their bets on December Fed-hike to 70 per cent. Indeed, it remains a possibility that a “Powell-put” under the US (and therefore global) share market may emerge, but the remarkably strong fundamentals in the US economy still imply a need for the Fed to hike interest rates – a dynamic that, if it materialized, will sustain volatility and further equity market adjustment. Overnight in Europe and America: To lower the eyes and turn focus to the day ahead, SPI futures are presently indicating a 9-point drop at the open for the ASX200. Futures markets have pared losses late in US trade, following a late session run on Wall Street that has seen the Dow Jones climb an impressive 1.86 per cent, the S&P500 rally 1.26 per cent, and the NASDAQ jump 1.56 per cent – though the latter may find itself legged in afterhours trade as investors digest Facebook results. The rally in the North American session followed-on from a soft day in European shares, which were mired by news of a potential ratings downgrade of UK debt by S&P, along with mixed economic data releases across the Eurozone. The USD climbed because of this imbalance between European and American sentiment, pushing the EUR below 1.1350, the Pound into the 1.27 handle, and gold prices to US$1223 per ounce. Australian CPI data: The trading week hots-up from today onwards, in preparation for several important fundamental data releases. Domestically, none will come more significant than today’s Australian CPI print, from which market participants are forecasting a quarterly price growth figure of 0.5 per cent. That number, if realized, won’t be enough to crack the bottom of the RBA’s inflation target band of 2-3 per cent, and will, in effect, affirm the central bank’s soft inflation outlook and dovish rate bias. As always, a figure of extreme variance to either side of market consensus could shift the Australian Dollar and interest rate markets. Traders remained wedded to the idea that the RBA won’t hike interest rates until early 2020: an extreme upside surprise in today’s CPI could see this adjust and spark a run higher in the AUD/USD towards trend channels resistance at 0.7200 – though this outcome is highly unlikely.
  38. 1 point
    Trump announces that the Fed is his biggest threat as they are increasing rates ‘too quickly’ Theresa May is to visit Brussels for an EU summit today to agree on the terms of the UK-EU agreement, in order for a final decision to be made in November Netflix quarterly results show yet another rise in new subscribers, signing up 6.96 million customers in this quarter, totaling a global amount of 137.1 million Canada becomes the second country to legalise the use of Cannabis and Marijuana Spot Gold market trend starts to incline, breaking out of its previous month’s bearish position above $1210 to $1219. IMF had arranged to attend a conference in the Middle East for October 23rd to 25th, however has now postponed the trip with no further explanation given China’s holdings of US Treasury securities declined yet again for a third month, plummeting its holdings by around $6billion to $1.165trillion in comparison to last years at $1.2trillion US stocks rise rapidly as some of the largest US companies announced strong quarterly results, helping regain the downward fall shown last week. This includes the Dow Jones, which surged around 550 points/2.2% and the S&P increasing by over 1.9% Asian overnight: Asia Pacific markets managed to follow the US and European lead overnight, with Japanese and Australian markets in particular leading the way higher. Interestingly, Chinese and Hong Kong markets were relatively muted, highlighting the continued fears surrounding growth in the region after Trump threatened yet another round of tariffs on Sunday. The level of debt to GDP in China has hit ‘alarming levels’, as a great difference is seen between reported investments and actual off-balance sheet debt. It is reported at estimates of highs of 30 trillion to 40 trillion Yuan ($4.34trillion to $5.78 trillion). According to analysts, this is mainly caused due to local Chinese governments investing deeply in infrastructure and funding in order to encourage economic growth UK, US and Europe: The UK is back in focus today, with inflation data likely to build upon yesterday’s jobs numbers to build a picture of the pressures on the BoE. With average earnings on the rise, the predicted fall in inflation could actually provide a positive differential between wages and the cost of living, thus raising real wages. UK wages grow at their quickest pace in nearly 10 years. The level of pay rose by 3.1% from the three months prior to August and a fall of 47,000 to 1.36million in unemployment levels.The EU summit will shift the market mindset back to Brexit, with the EU having allowed Theresa May the opportunity to find a solution to break the deadlock. In the US, keep an eye out for housing data, with building permits and housing starts being released. However, the big release comes later on, with the Fed due to release their latest monetary policy minutes. Crude traders will also be keeping a keen eye on the Crude inventories data following substantial build-ups over the past two weeks. The Fed to release their latest monetary policy minutes later today Results from further investigation, in regards to the Saudi journalist Jamal Khashoggi, may show greater strain on how the US and Saudi Arabian relationship will be effected. This has caused three large banks including HSBC, Credit Suisse and Standard Chartered to pull out of Saudi’s Future Investment Initiative event in Riyadh. Among these, Google’s cloud division, Mastercard, JP Morgan and many others have also decided that they are not attending the event. South Africa: Upbeat US corporate earnings is seeing the tech sector leading gains in the worlds largest economy (the US). The dollar has however firmed up a bit, putting some pressure on commodity prices and the rand. BHP Billiton is down 0.7% in Australia, suggestive of a softer start for local diversified resource counters. Naspers, which has roughly a 20% weighting in the Top40 Index, is expected to open higher this morning in lieu of the improved sentiment surrounding tech sector stocks. Our local market will look to Retail Sales data at 1pm today for for guidance as to the health of South Africa's retail sector. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 9.30am - UK CPI (September): CPI to rise 2.4% YoY and 0.5% MoM, from 2.7% and 0.7%, while core CPI rises 1.8% YoY and 2.1%. Market to watch: GBP crosses 10am – eurozone CPI (September): forecast to rise 0.2% MoM. Market to watch: EUR crosses 1.30pm – US housing starts & building permits (September): starts expected to fall by 3.5% YoY, and permits to rise 1.2%. Market to watch: USD crosses 3.30pm – US EIA crude inventories (w/e 12 October): forecast to see a 1 million barrel rise in inventories. Markets to watch: Brent, WTI 7pm – US FOMC minutes: the committee’s decision to raise rates will be revealed in more detail, providing volatility for the US dollar and equities. Markets to watch: US indices, USD crosses Corporate News, Upgrades and Downgrades Afrimat expects earnings per share and headline earnings per share, for the interim period to be between 92 cents and 97 cents per share (2017: EPS of 102.4 cents per share and HEPS of 102.2 cents per share), reflecting a decrease of between 5% and 11% on the previous period. Pearson said revenue was flat for the first nine months of the year, and the firm has reiterated its annual profit guidance. Barratt Developments has made a strong start to the year, with a 12.4% rise in forward sales, to £3.15 billion compared to £2.8 billion a year earlier. Mediclinic said that first-half revenue fell 1% to £1.4 billion, while adjusted EBITDA was down 8% to £21 million. Lyft has hired JP Morgan to lead its IPO for 2019, potentially increasing its value to over $15billion BlackRock’s stock falls by over 5% due to their third-quarter revenue results falling below expected results, totalling at $3.576billion in comparison to $3.648billion. Nevertheless, BlackRock published earnings per share at $7.52, in comparison to an expectation of $6.84 Audi to be fined £700million/$800million as an investigation occurred in relation to a diesel emission scandal Morgan Stanley increased more than 5% after the announcement of improved results in earnings. This led to earnings per share at $1.17 rather than the forecasted results of $1.01 Goldman Sachs had reached a higher level than estimates in profitability levels, resulting in $8.65billion of revenue from an estimated $8.4billion. This results in levels of $6.28 per share in earnings, from its estimates of $5.38. Volvo shares decline by 5% due to an announcement explaining potential emissions failure, with vehicles emitting illegal levels of nitrogen oxide Dollar Tree’s stock increased to highs of 7.1% after investor Carl Icahn had taken a stake in the company Uber targeting $120billion valuation for next year, as Wall Street banks advise that its worth more than three times the automaker Ford IBM revenue decline to $18.8billion in the third quarter, falling by 2.1% against expected results Shares of Tencent faces an extreme decline of 40% from January, eliminating more than $230billion in market value BillerudKorsnas upgraded to buy at SEB Equities Coca-Cola HBC raised to hold at Wood & Company Hellenic Petroleum raised to overweight at Pantelakis KPN upgraded to overweight at Barclays ConvaTec cut to underperform at Credit Suisse Handelsbanken downgraded to sell at DNB Markets Michelin downgraded to neutral at Goldman Safran downgraded to underperform at Jefferies IGTV featured video 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.
  39. 1 point
    Wall Street: It's still early days, but investors appear to have regained their nerve overnight. The Asian session was tepid, to be sure, however a rally in European and US equities reveal a market that has found its appetite for equities again. As the existing narrative would imply, much of this was underpinned by a fresh appetite for rate-sensitive US big tech stocks, which according to the NASDAQ, rallied almost 3 per cent overnight, leading both the Dow Jones and S&P in the realms of 2 per cent higher. Implied volatility fell, but remains relatively high at around 18, so of course it would be foolish to claim the recent sell-off is authoritatively through. In stating this, commentary has shifted away somewhat from risks from rates and tariffs, to anticipating the fruits of what is expected to be a bumper reporting season – particularly after the likes of Goldman Sachs and Morgan Stanley posted impressive results early this morning. Europe: Likely owing to being largely oversold to begin with, the strong activity in European equities come despite a mixed-news day for the region. Like much of the global-share-market following last week’s equity rout, valuations and dividend yields within European indices have become more attractive this week, apparently enough to attract buyers into European share markets, even against doubts regarding the strength of the region’s upcoming reporting season. UK data provided some impetus for the bulls last night, after labour market figures showed that the unemployment rate held at 4.0 per cent and average earning climbed by an above forecast 2.7 per cent. The GBP/USD pushed-up just below the 1.32 handle on the news, however rate markets were more-or-less steady, as traders ostensibly tie their BOE rate-hike bets to the outcome of souring Brexit negotiations. Macro-backdrop: The boost to investor sentiment has infused equity traders with glimmers of confidence, though the greater appetite for risk hasn’t necessarily flowed through to other asset classes. Yields on US Treasuries were flat the last 24 hours, and despite climbing back above the 112-handle against the Yen, the US Dollar has failed to catch a major bid. Risk proxies like the AUD and NZD are a skerrick higher, with the Aussie Dollar floating about 0.7140, but gold is still finding haven buying, holding above a support line at $US1224. Moreover, proving that last night’s rally isn’t on the firm basis of greater confidence in global growth prospects, the Bloomberg Commodity Index edged 0.1 per cent lower, even considering a sustained increase in oil prices amid fears of lower supply because of a potential rift between the US and Saudi Arabia. ASX: The strong overnight lead has SPI futures pointing a 28-point jump for the ASX200 at this morning's open, following a day in which the Australian share market popped modestly higher from its oversold levels. The pop was reflected primarily in the activity in bank stocks, which rallied-off its own oversold reading, to collectively climb 0.55 per cent for the session. It was the materials space though that led the index higher, courtesy of a 1.4 per cent rally, despite the limited price gains in commodity prices yesterday. The day's trade establishes an interesting dynamic for the ASX200 today: the index fought unsuccessfully throughout trade to re-enter last week's broken trend channel. Futures markets has this transpiring at the open - a positive sign for the Aussie market. Regional data: Despite leading to limited price action across the region, Asia was littered with fundamental data yesterday. It was kicked-off early morning our time, upon the release of key New Zealand CPI data, which revealed stronger than expected consumer price growth of 1.9 per cent annualized for that economy. The algo-traders seemed to kick-in post the event, pushing the NZD/USD to the significant 0.6600 handle, before human rationality took over the pair lower, primarily on the knowledge that the data wouldn’t change materially the RBNZ’s interest rate views. Chinese CPI data was also printed yesterday, revealing an-expectation figure of 2.5 per cent – up from the previous 2.3 per cent. Once again however, although inflation is proving to be running a little hotter in China, trader’s judged that the news wouldn’t shift the dial for policymakers and promptly moved on. RBA’s Minutes: Of domestic significance, the RBA released the minutes from their recent meeting, with very little novel information to glean: “members continued to agree that the next move in the cash rate was more likely to be an increase than a decrease. However, since progress on unemployment and inflation was likely to be gradual, they also agreed there was no strong case for a near-term adjustment in monetary policy”. The reaction in market was one of the more muted from an RBA release, registering barely a reaction across financial markets. There were some interesting points discussed from a purely academic perspective in the document – some substance for the economics-nerds – especially relating to hot global asset prices, but nothing in the way of potential policy approaches from the central bank. FOMC Minutes and Reporting Season: Approaching the half-way mark for the trading-week, investors prepare for its pointier end. The major event will transpire tomorrow morning local time, in the form of the FOMC Minutes from the US Federal Reserve’s last monetary policy meeting. Of course, most of panic and volatility in global markets has come because of the Fed’s hawkishness in recent times, so market participants will peruse the details of tomorrow’s minutes for insights that confirm or deny fears about higher global rates. The broader market will also engross itself further in US reporting season, with Netflix (for one) posting what is being considered currently a better than forecast set of numbers, by way of virtue of a smashing of subscription growth estimates.
  40. 1 point
    Dead cat bounce in Asia? The ASX200 really couldn’t catch a bid yesterday. Most concerningly, it happened within a back drop of slightly higher volumes, showing that the sellers truly washed out the bulls throughout the day’s trade. The Asian region kicked-off the week sluggishly in general, unable and unwilling to run with the lead provided by Wall Street on Friday evening. The action in Asia prompted calls of a dead-cat bounce across global equities, something that has since been proven premature, based on the mixed day witnesses overnight in the European and US session. There just appears such a general reluctance for investors to search for value in the Asian region, despite the cold-hard numbers implying that pockets of it exists. Of course, P/E ratios and yields never tell the full story, and often lag actual changes in earning’s forecasts. Yet still, it does feel surprising, if not concerning, that the pockets of value that exist aren’t being seized by investors. Where are the buyers? It’s none-truer than on the ASX200, ahead of a day in which SPI futures are implying a 1-point jump at the open. The Australian share-market is presenting as a trifle oversold, with the daily-RSI stuck at multi-year lows, but downside momentum slowing-down only gradually. An absence of growth investors has stripped the Aussie shares of much of their bid, in-line with investor behaviour across most equity markets in the face of rising global rates, but again, the curious point – one that sets the ASX200 somewhat apart at present – is the missing search for underling value. In principle, it shouldn’t be too difficult to find: the sell-off across the local market has pushed yields just-shy of 4.50 per cent, while the project 1-year P/E ratio for the overall index is just above 14:1. It could be that a VIX above 20 is too higher to attract buyers at this stage – it will be an important litmus test for the market as to whether the ASX200 catches a bid when this unwinds. ASX Downside: To be fair, there are some considerable headwinds for Australian investors that may preclude them from behaving in the same fashion as their US or even European counterparts. The banks look ugly now – less so the hard numbers, but more from the superficial perspective that their brands have been (justifiably) diminished by the effects of the Financial Services Royal Commission. The best-yielders on the Australian share market are comprised in a big-way by the banks, so a lack of yield chasers in the market could come based on a sizeable reluctance to buy banks, even at apparently cheap prices. Following a day for the ASX200 that only saw the energy space catch-a-lift, entirely due to a since faded bounce in oil prices, buying impetus could be difficult to come by in the day ahead for the index, as support around 5800 returns to trader’s sights. RBA Minutes: It won’t change much the trading dynamic for Australian shares, but some useful insights regarding the Aussie-macro backdrop will be handed to us in the form of RBA Monetary Policy Minutes today. The interest generally will be directed towards any idea into the confluence of factors stifling the Australian households: financial stability will be one, a lack of wage growth another, so will high levels of private debt amid falling property prices, along with increasing retail interest rates, and (to a lesser extent) how global risks will affect the local economy. Despite the abundance of information, for traders, the dial probably won’t shift in rates market expectations that an RBA hike won’t come until 2020; nor in the AUD/USD, which will probably find support at 0.7100 even in the event of the most dovish tone to the minutes. China: Zooming out the microscopic lens for a moment: Australian financial markets are being served no favours by what is transpiring in Chinese markets. It was another rough day for China-bulls, who were legged by a fresh bout of selling after news broke that US President Trump – while riffing in an interview with CBS – may consider a fresh round of tariffs on the Middle Kingdom’s economy. Counter-arguments based on fundamentals aside, there seems to few willing to bet on a strong Chinese growth story at presetn. The comprehensive Shanghai Composite hit lows not registered since November 2014, while the narrower, blue-chip laden CSI300 languished around 2015 lows. This week will be illuminating for investors regarding whether the growth-outlook is indeed this poor for China, with CPI data day (for one) kicking-off a slew of Chinese fundamental data releases. Chinese growth, global growth: Perhaps it is so that the actions of Chinese policy makers are raising concerns about the country’s dubious growth prospects. Markets seem to interpret any policy intervention from the government or PBOC as a minor concession that things in the economy aren’t so great. The logic makes sense: there is the view that China’s economy is a touch opaque, and that Chinese data is prone to some level of manipulation. The offshore Yuan is manifesting signs of this scepticism, as the PBOC apparently conforms to the markets desire to devalue the Yuan, to potentially the key psychological barrier of 7.00. How far Chinese, and broader Asian indices, may fall before bottoming out is becoming an increasingly interesting question, as sentiment overrides the highly attractive valuations to keep the bears in control. Overnight: The underwhelming display in the Asian session translated into mixed European and US trade overnight. There was little depth of fundamental data, and though Brexit negotiations and fears of deteriorating ties between the global community and Saudi Arabia persisted, it wasn’t enough to incite panic in market participants. US Retail Sales disappointed slightly, but trade was defined more by a general lack of confidence in US investors: US Treasuries ticked higher and the USD dropped –benefitting gold again, driving its price temporarily above $US1230. A rotation away from growth stocks – that is, the tech-giants – continued by way of virtue of fears surround trade-wars and higher global rates, driving the NASDAQ lower, and the Dow Jones and S&P500 weren’t able to catch and hold onto their early-bid, selling-off in late trade as investors struggled to grasp whether generally higher growth-risks will manifest in the upcoming earnings season.
  41. 1 point
    Macro-drivers: Global markets endured a night of mixed trading, sandwiched between several risk factors, and the waning optimism of the USMCA. US indices were generally lower, although the large-cap Dow Jones managed to register new all-time highs. European markets were held back by grief surrounding Italian fiscal sustainability, coupled with lingering concerns about the outcome of Brexit. The general sense of risk aversion led to an appreciating USD and climb in US Treasuries, pushing yields on the benchmark 10 Year Treasury note to 3.05 per cent. Oil cooled its run somewhat as commodity traders took a breather, as WTI and Brent Crude clocked gains above $US75.00 and $US85.00 per barrel, respectively. The overnight session establishes an uninspiring lead for the Asian markets in general, auguring a mixed day ahead. ASX: SPI futures are pointing to a slight uplift in the ASX200 this morning, backing up a day which saw the Australian share market shed 0.75 per cent. There were really no winners on the day, with the only sector coming-out in the green being the energy sector. The financials couldn’t halt their sell-off, declining another 1.12 per cent yesterday, while the losses were compounded by a reversal in the price of CSL, which led the health care sector 1.36 per cent lower on the day. The breadth of gainers for the session were low again at 23.5 per cent, and volume was robust, indicating the (on balance) bearishness of this market. Momentum hasn’t shifted dramatically to the downside yet, but yesterday’s break of support at 6160, and close just above support at 6120, suggests some sluggish times ahead for Aussie shares. RBA: The local session yesterday was bereft of truly impactful news, but of course attention was duly allocated to the afternoon’s meeting of the RBA. No surprises were what was expected, and no surprises is what traders got: there was a tip of the hat to the accuracy of the central bank’s growth forecasts of +3 per cent, a reiteration of only a gradual return of full employment and at-target inflation, and a very soft warning of how low wage growth and high private debt levels may hinder household consumption. The reaction in interest rate markets was dull, but slightly to the downside: bets of a hike from the RBA got pushed back to March 2020 as opposed to February 2020, according the ASX 30 Day Cash Futures markets. Aussie Dollar: The Australian Dollar came-off shortly after the meeting however, slipping from about 0.7230 to plunge beneath support at 0.7200. To the naked eye it would appear a reaction to what was (perhaps) a dovish RBA, but close inspection suggests the impetus lay somewhere else. Risk currencies sold-off in tandem at around 3.00PM (AEST), as news broke out of Europe about Euro-policy makers concerns about Italian fiscal policy and the possibility of an Italian default. The spread on Italian and German 10 Year bonds widened once more (to currently trade around 300 basis points) sending the EUR to 1.1540 as funds flowed into the safe-haven USD. Naturally, the AUD suffered as a result, to presently just shy of 0.7190. Italy and Europe: The Italian fiscal situation in looming as a major risk for the European economy. It is not getting quite as much local press as it deserves, though this is in a sense justifiable given the preoccupation with the grave implications of the US-China trade war. The crux of the issue in Europe relates to the ruling “populist” government in Italy, and its reluctance (or even refusal) to comply strictly with the Eurozone’s rules regarding sovereign budget deficits. The recent Italian budget has tested European bureaucrats’ patience, leading to a rebuke yesterday from European Commission President Jean-Claude Juncker, igniting a counter-response by key Italian “League” politician Claudio Borghi, who stated Italy could solve its problems if it controlled its own currency. The hostility swept through European bond markets, spurred a sell-off in equities and pushed the EUR well into the 1.15 handle. Greenback: The US Dollar was the inevitable beneficiary of Europe’s woes, climbing to a 6-week high, in DXY terms, to 95.50. The trading activity is a reminder of the two-pronged benefit of long USD positions at-the-moment: the US Fed’s determination to hike interest rates is attracting yield chasers, supporting the greenback, while the litany of global risks is pushing traders intermittently into safe havens, also supporting the greenback. The upward trend has cooled for the USD of late, leading to calls that the currency could be creeping towards a top. But with US Fed Chairperson overnight talking up the “extra-ordinary” times experienced by the US economy, as well as talking down the prospect of out of control inflation caused by tight labour markets and increases in global tariffs, the underlying bullish-trade remains well justified for the greenback. US Indices: A question raised by such bullishness from market participants and policy makers alike is, how much further can the US equity bull run last? It’s foolish to ever call tops on any market, especially one that is apparently founded on such strong fundamentals. The benchmark S&P500 and NASDAQ traded lower overnight, though both indices sit within reach of new all-time highs. The far narrower Dow Jones index, however, registered a new intraday high during the US session, climbing 0.46 per cent to close at 26773.94. A word of warning must be disclaimed with the Dow Jones as relatively high as it: though one wouldn’t want to call a marked sell-off, rallies for the Dow Jones that extend this far above the more comprehensive S&P500 often result in a pull back for the Dow Jones, as traders buy into the index in an attempt to enter-and-exit the market on the basis of rosy-sentiment. 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.
  42. 1 point
    ASX: SPI futures are indicating a 23-point drop at the open for the ASX200 this morning, effectively wiping Friday's solid gains. It comes as no surprise, really, with the lion's share of activity centring around the embattled financial sector. Bank stocks underpinned the rally on the ASX on Friday, led by CBA, in signs that the market believed the sector's recent trend lower was overdone. It may be a case of jumping the gun for traders on that one, as sentiment appears sour once more following the weekend's release of the Financial Services Royal Commission interim report. The materials and energy sector did its bit on Friday to carry the ASX higher, courtesy of a broad-based, though modest, uptick in commodity prices; while the health care sector continued to erode its market leading YTD gains, led by a near 2 per cent fall in the CSL shares, creating drag on the overall index. ASX technicals: The price action on the ASX200 was much livelier on Friday as compared to previous days last week, perhaps a sign of increased bullishness following days of anxiety leading into the Fed. An overarching theme is lacking for the ASX now, leading to a mixed sentiment across different sections of the market. Volume was high during Friday's session, especially as the index toyed with the 6230-mark, an important level of support/resistance in recent months. Considerable profit taking emerged at that level, pushing the market well in line with its recent (more-or-less sideways) trend. The pattern appears set to continue today, in the absence of a fundamental impetus or a strong external lead. China update: The strong possibility of thin liquidity may hinder the market today, and perhaps the rest of the week, thanks to the week-long Golden Week public holiday in China. The relationship has diminished somewhat of late, but Australian markets have taken the lead of its Chinese counterparts in recent months, as fears around China's economic activity feed through to Australia. Despite not being out of the woods yet, signs are looking more promising in Chinese equity indices now, which have managed to stick fat to key technical support levels in the past week. The interesting story for those invested in Chinese assets this week will be how the USD/CNH fares with Chinese traders out of action, with the Yuan looking vulnerable to the downside towards the very important level of 6.90, following the release of weaker Caixin PMI figures over the weekend. PMI data: Speaking of PMI data, one of the significant themes this week will be the release of a spate of PMI figures across several geographies. As a great leading indicator of economic strength, particularly considering the escalating trade war, PMI numbers have softened in recent months, presumably because of tighter trade conditions. The poor Chinese PMI print sets up the release of corresponding figures in Japan, the UK, and the US today, with traders of the industrial laden Dow Jones, Nikkei and DAX surely paying attention. Given a leitmotif in markets last week was the Fed's optimistic view on global growth into the next 12 months, the data dump of global PMI data provides the first opportunity to test this proposition, and subsequently form a position on this state of markets leading into the final calendar-quarter for the year. US indices: Wall Street (for one) will be entering into a curious and frenetic period as the new month rolls around, as traders prepare for what is typically the hottest period for US equity markets. The results for North American equities were lukewarm on Friday, with major US indices holding flat for the day. The so-so performance for US shares throughout last week was still enough to ensure the strongest quarter for US equities in 5 years and place those markets well in touch of all-time highs. The element of the present trade dynamic that may make-or-break the market this quarter is how it weathers upcoming US mid-terms: US shares typically stall in the month leading into such an event, notwithstanding that this round of elections appears a vote on the confidence, support and legitimacy of US President Trump. Europe and the DAX: European markets look to remain stuck in the middle of several local and international themes. Concerns lingered over the weekend regarding Italian fiscal policy, along with ongoing fears about a no-deal Brexit and the effects the US-China trade war will have on Europe’s fledgling economic recovery. The DAX has demonstrated the sentiment-sapping effects of these confluence of factors, remaining trapped in a downtrend since mid-June, even despite rallies higher in indices with comparable trading behaviour, like the Nikkei. The downward trendline currently at 12,430 will be a formidable barrier for traders, with a solid hold above support at 12,100 required to set the foundations of a swing in momentum and a trend reversal in the near-term. Oil: A status check of activity in the oil market should be undertaken to start the new week. The price of the black stuff continues to rise, on the back of greater concerns around production and supply on global markets. The US sanctions on Iran seem to be more impactful than first believed, exacerbated by the view that OPEC+ won’t be bullied nor cajoled by US President Trump to fill the gap in supply. The US President reportedly reached out personally to Saudi Arabia’s King Salman on the weekend to discuss the matter, highlighting the risks higher prices will have on global growth and market stability. No firm outcome was reported out of the interaction, as some more bullish commentators grow louder in their calls that no change to the present trade dynamic will see oil fly to $100USD in Brent Crude terms. 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.
  43. 1 point
    The pain in emerging markets continues to be too difficult to ignore, although it must be said that the effects of the crisis were relatively contained in overnight trade. There is this sneaking suspicion in markets presently, that whatever the worst outcome is for emerging markets, some of that must inevitably spill into the developed world. The issue is however, it remains to be seen how and where these signs of contagion may first show-up. Now of course it may not do so at all, but as the scope of the emerging market crisis is uncovered, the willingness to take the risk that it won’t spread to major financial markets is waning. Global Indices: Against this back drop did the overnight session unfold, which showed the signs of the cautiousness pervading markets. Across global equity indices, the losses associated with the emerging market crisis (not to mention the trade war) persisted, with European indices all dropping more than 1 per cent; while their US counterparts also dipped, though were again less affected, demonstrating that region’s fundamental strength. The NASDAQ tumbled over 1 per cent, but that was due to scrutiny on the tech sector from a US Senate Intelligence Committee hearing about social media and foreign influence on US elections. This backed up another day of dismal activity in Asian markets, which saw the CSI300 lead the region lower, down nearly 2 per cent. Haven plays: What is somewhat of a curiosity against the backdrop of diminished risk appetite is that there hasn’t been a huge pay into safe havens. Indeed, a degree of this has occurred, but not to the extent witnessed over the past several months when geopolitical and global financial risks have emerged. US Treasuries have best demonstrate this, with the yield on benchmark US 10 Year Treasuries floating 1-point higher to 2.90 per cent. In addition to that, the spread between that asset and its 2-year counterpart has widened, which often reflects an increased confidence about the medium-term prospects of an economy and financial markets. Currencies: Hence, the activity in havens and currency markets more broadly may provide the insight into how to assess the emerging market crises and its effect on global equities. The US Dollar has perhaps benefitted from the yield play, but it hasn’t sky rocketed like was witness post the Turkey crisis. Moreover, the JPY, normally the chosen risk-off asset for traders, has fallen against the greenback, to trade at around 111.50. The GBP and EUR have lifted, saving the sterling from its struggles around the 1.28 handle, but that can be more attributed to improving relations between the UK and Europe. Ultimately, maybe the incongruent behaviour is equities, bond and currency markets reflect only a temporary withdrawal from equities while the emerging market problems are better understood. ASX: The notion that the sell-off in global equities is transient and not structural will do little to console ASX200 bulls. SPI futures are indicating a drop of another 11 points at the open this morning, backing-up a day in which the market shed over 1 per cent. On a technical basis, the close yesterday below what was a relatively strong area of support around 6240 should be considered a concern. This opens room for further selling deeper into the 6200s, with 6220 being the next rung down from here. Given that yesterday’s losses were led by a 2 per cent fall in the materials sector, and that commodity prices collectively fell by around 0.5 per cent last night, a test of these levels on balance looks possible today. GDP: Amid the sell-off in the ASX200 yesterday, the ABS released GDP figures for the June quarter, which smashed expectations out of the park. In a total reversal of the prevailing sentiment following a few weeks of weak data, the growth rate for the Australian economy was shown to have climbed to 3.4 per cent, exceeding even the RBA’s generally optimistic forecasts. The result places the Australian economy near the top of the OECD in terms of economic growth and comes even despite numerous domestic and global headwinds. While local traders effectively ignored the news – although AUD did temporarily bounce back around the 0.7200 – the growth figures do reassure investors that conditions are generally strong from a fundamental standpoint. Consumption and rates: One area of yesterday’s GDP data that placed a dampener on the overall release, and caused a point of contention for market participants, was the revelation that the savings ratio has dipped to its lowest level since before the global financial crisis. The sluggish wages growth in the Australian economy explains this dynamic, as Australians on aggregate try to maintain their quality of living in the absence of pay rises by eating into savings. It is possibly this news, and its implications for already stretched consumption in the Australian economy, is what kept a lid on interest rate traders bullishness, with interest rate hike expectations ticking up only very marginally yesterday. 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.
  44. 1 point
    Trump back introduction of tariffs on $200 billion worth of Chinese goods in ongoing trade dispute with China US president also threatens to withdraw the United States from the World Trade Organisation "if they don't shape up", claiming unfair treatment US & Canadian leaders optimistic in reaching revised NAFTA agreement by today's deadline Panasonic are set to move their European base outside of London to mitigate risk going into Brexit Argentinian government raises interest rates to 60% after slump in Peso Gold enters fifth straight month of decline; longest losing streak since 2013 Asian overnight: Yet again we have seen Donald Trump force the agenda on global markets, with his statement that the US could leave the WTO dampening sentiment throughout the overnight session. Losses throughout China, Hong Kong, and Australia were accompanied by marginal gains on the Nikkei and a flat Topix in Japan. The developing focus of late has shifted to Argentina following recent developments in Turkey and Venezuela. Despite the Argentine central bank ramping up rates to 60%, we still saw developing markets suffer, with the Turkish lira, Indonesian rupiah, and Indian rupee all losing ground overnight. Data-wise, the Chinese PMI surveys saw a stronger than expected reading for both the manufacturing and non-manufacturing sectors. However, with a potential $200 billion of US tariffs looming, Chinese traders has little to celebrate. UK, US and Europe: Looking ahead, the eurozone comes into view, with the release of unemployment and inflation data bringing expectations of a rise in euro volatility. The rise in eurozone CPI has seen the reading hit 2.1% last month; the highest level since 2012. Any further upside would no doubt put further pressure on the ECB. In the US, traders will be looking out for the Chicago PMI and Michigan consumer sentiment surveys. Economic calendar - key events and forecast (times in BST) 10am – eurozone unemployment rate (July), inflation (August): unemployment rate forecast to rise to 8.4% from 8.3%, while inflation forecast to be 2% YoY from 2.1%, and core inflation to be 1.2% from 1.1%. Market to watch: EUR crosses 2.45pm – Chicago PMI (August): forecast to fall to 63 from 65.5. Markets to watch: US indices, USD crosses Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades John Laing Fund saw a rise in Net asset value to 130p, from 124p in the first six months of 2018. The total return of the fund now stands at 75%; 7.5% on an annualised compound basis. Profit before tax for the six-month period stands came in at £89.0 million compared with £34.7 million the same time last year. The 3.57p per share dividend announced in May 2018 is now joined by a 3.57p per share for the six months to 30 June 2018. Whitbread has agreed to sell Costa Coffee to The Coca-Cola company, in a deal worth £3.9 billion. That price represents 16.4 times the operating earnings of Costa in the 2018 financial year. IAG reinstated as Buy at Citi EasyJet rated new Buy at Citi Ryanair rated new Buy at Citi Lufthansa reinitiated as Sell with Citi IGTV featured video 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.
  45. 1 point
    Global equities: Global share-markets experienced a lift overnight as European and US investors jumped online to begin the week. The overall mentality now can be characterized as one of cautious optimism ahead of low-level US-China trade talks, mixed with a touch of relief that crises in Turkey and other emerging markets are currently quarantined. Chinese markets picked up steam in late trade because of this point of view, while the Dow Jones represented this broad attitude during the North American session – adding 0.35 per cent, largely thanks to a pick-up in the industrial sector. The best performer of the major indices though was the DAX, which managed to turn around the weakness reflected in futures markets earlier in the day, to clock gains just shy of 1 per cent at that market’s close. ASX: The general positivity during overnight trade establishes a positive lead for the ASX200, with SPI futures presently indicating a 3-point jump at the open. Trade was very subdued in Australian shares for the best part of the day yesterday, as traders stepped back from the market after the ASX’s early morning leap proved fleeting. It was likely a profit-taking opportunity for punters, who lacked the impetus for further buying following a handful of soft company reports prior to market open. Coming into the day a level to note was around 6360, which signified the extension of an upward sloping line of resistance, dating back to 2016. True to form, the ASX high for the day was just below this mark, perhaps providing insight into where the next major barrier exists for the index. Reporting Season: Carrying-over from what was generally considered to be better than expected results from the reporting company’s last week, hope sprang leading into yesterday’s trade that the outperformance from Australian corporates would continue. In isolation, the earnings figures from the company’s reporting yesterday were relatively underwhelming, with none of the handful of major reporting company’s exceeding estimates. Woolworths was the headliner yesterday, and despite reporting respectable profit growth and a bonus dividend, the company’s stock fell by over 1 per cent after sales growth and net income printed weaker than expected. The day ahead will see interest turned to results out of BHP and Seven West Media this morning. ASX and Trade Wars: One interesting take away from the day’s reporting might be the small cracks appearing in some segments of corporate Australia because of the developing global trade war. For one, Fortescue Metals reported yesterday and disclosed lower revenues and a forecast period of slower growth as demand for iron ore falls. But perhaps the more interesting trade-war related takeaway came from Ansell’s earnings call, which revealed that along with softer earnings in the last year, the company expects to grow at a slower rate than previously expected due to the higher input costs related to the trade-war. The Ansell example shows how insidious the impacts of higher costs associated with protectionism can be, and how acutely these impacts can be felt by investors. Trump’s cherished Dollar: The US Dollar took a tumble last night, ending in effect its week long bullish tear. The fall came on the back of a news release that US President Donald Trump (has once again) openly chastised US Federal Reserve Chair Jerome Powell – this time while delivering a speech at a charity event. The US President stated he thought Chairperson Powell would be a “cheap money” Fed-Chair and lamented the increase in US interest rates. The US Dollar Index fell 0.2 per cent as the news trickled through the newswires, pushing the EUR/USD back towards the 1.15-mark and the AUD/USD through resistance at 0.7310 to trade 0.7340 when last looked. The US Dollar is now sitting around 40-points above quite a significant support level at 95.40, the collapse of which would take the greenback back to the levels it was trading at prior to the Turkish Lira crisis. RBA and local interest rates: The day ahead will be one focused on RBA policy and Australian interest rates, as traders prepare for a speech to be delivered by RBA Governor Philip Lowe early this morning, followed by the release of the RBA’s Monetary Policy Minutes at 11.30AM. While broader macroeconomic insights will be analysed closely by market participants, the content out of both today’s events will likely prove solely academic. Subjects like trade wars, inflation, private debt and the property market will capture interest, but what can be inferred from the discussion on these topics probably won’t move markets. The RBA has fallen in line with interest rate markets, particularly in recent months, strongly implying that Australian rates will not be shifting until early 2020. As such, what information received today out of Governor Lowe and the RBA will have already been priced-in to rates and currency markets. Global interest rates: The area of global financial markets that has been – and will continue to be – of greatest interest this week is US interest rates. The annual Jackson Hole Symposium is scheduled this week and will be prefaced by the release of FOMC Monetary Policy Minutes for the Fed’s most recent meeting on Thursday. The theme dominating trading leading into these events is the stubbornness of long term US bond yields, and the market’s apparent reluctance to push yields higher in tandem with short-term rates. The situation has some pundits worried, given the myriad of risks in markets currently, and the fact an inverted bond yield often portends recession (see 2Y and 10Y spread below). However, for equity markets, lower long-term funding costs would support valuations and attract yield chasers into stocks, so it may pay to be privy for stock traders to keep track of monetary policy news as the week develops. 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.
  46. 1 point
    Sentiment: Global risk appetite diminished once again overnight, sparking sell-offs across equity markets. The concerns about the fragile state of the Turkish financial system and what that might mean for markets was behind the fall, as traders sought out safe havens to park their money. The US Dollar held its advance consequently, but it was the JPY that saw the most activity, with the USD/JPY falling as low as 110.43. Following Tuesday’s relief rally, it would appear investors aren’t quite prepared to let go of the risk associated with Turkey’s financial crisis, which is compounding fears about trade wars and slower global economic growth. The risk-off play may find itself fuelled today, as investors become wary of the next round of Brexit negotiations, due for kick-off in the next 24 hours. Commodities: Commodities markets experienced some of the most volatility in the overnight session, slammed by fears of global financial risk and economic slowdown. Copper entered a technical bear market, as it tore through the $US60.00 mark and several lines of resistance to trade at $US57.92. Oil slipped too, owing to fears of lower demand due to slower global growth, and after crude oil inventories printed higher than forecast. Gold’s aggressive sell off continued, plunging through support at $US1180 an ounce, and seriously opening-up further falls towards $US1120. Of relevance to Australia, iron prices were one of the worst performers for the day, pin dropping 3.5 per cent, portending a tough day for mining stocks. Overnight session: Stocks in Europe and on Wall Street took a plunge courtesy of the weak sentiment last night, with the FTSE and DAX giving up around 1.5 per cent, and the US benchmark S&P shedding 0.76 per cent. The shift lower was led by global tech stocks, which were rattled by news that Chinese tech giant Tencent Holdings reported its first profit drop in a decade. The NASDAQ fell 1.2 per cent throughout trade on the back of weak sentiment and the sell-off in tech shares, weighing on the rest of US shares. The poor return for US comes even though US CPI figures overnight strongly exceeded expectations, revealing that despite the risks and interferences, the US economy is fundamentally strong. ASX: SPI futures are presently pointing to an ASX200 that will be caught in the fray of last night’s equity sell-off, indicating an open around 50 points lower. The dip will follow a day in which the local market closed at 10-year highs, as traders finally managed to push the ASX above the significant psychological barrier around 6300. Remarkably, the milestone was achieved without the collective might of the materials and financial sectors, which each fell 0.91 per cent and 0.21 per cent respectively. The hope will be now that, despite what appears to be a tough day ahead, the close above 6300 yesterday sets a precedent for the markets and can elevate to such levels with much greater ease. Reporting season: Earnings season provided the strong fundamentals for investor activity during the local session, with several stories leaping out of the day’s trade. Shooting star CSL climbed after it beat average analyst estimates, rallying to a record high above $210 per share. Wesfarmers also posted results which, although on the surface appeared incredibly poor, showed that when stripped of one off costs associated with losses and write-downs, the net income of the company was stronger than generally expected, pushing the company’s share over 3 per cent higher. The laggard for the day was IAG, which fell over 6 per cent after the company’s net income missed even the lowest analyst estimate. The earnings season will now turn likely be dominated by the release of several of the ASX’s big hitters, including Telstra, QBE and Treasury Wine Estates. Australian Dollar: The Australian Dollar remained one of the worst performers across currency markets overnight, falling precariously close to the 0.7200-flat mark. The Aussie currency has taken the form of the preferred global risk-off proxy this week, amid concerns first in China and now in other emerging markets. With risk unlikely to abate, Chinese economic growth faltering, a falling yield advantage and a roaring USD, it’s hard to imagine a situation in which the AUD will find support. Local wage growth data yesterday – which came in at expectations but revealed that the Australian economy is experiencing flat real wage growth presently – sets up the release of employment data today, with both data points likely to enervate the local currency. AUD & ASX: The silver lining to the Australian Dollar’s fall has been its support for the local equity market. In what is a rather strong correlation, the over 4 cent falls in the value of the AUD/USD since the middle of June has driven funds into the local share-market, delivering a tacit endorsement from investors to our market, corporate health and economy. The reason that the weaker currency is supportive of the ASX is twofold: on one hand, Australian stocks have become relatively cheaper when compared to their global counterparts; and on the other, revenue denominated in foreign currencies can be converted at a lower exchange rate, boosting businesses earnings. Please note: This 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.
  47. 1 point
    Hi all - I just wanted to update you on a great new feature which has been implemented on the back of client feedback! For all ProOrder automated trading users of ProRealTime, you can now have an email automatically sent whenever your trading strategy is: Stopped (for any reason) Due to expire in x days This is obviously a great new addition to the PRT offering helping you keep in control of your automated strategies whilst they're running but you're not at your computer. We'd love to know what you think about this - so please feel free to drop us a message in the comments section below. To set this feature up launch ProRealTime and head to Options > Trading options > Automated trading > Email notification: For those who don't know about Pro Real Time please feel free to check out the following link which gives an overview of this advanced charting package which you can use to trade on your IG account. As above, please feel free to continue to share feedback either below, or in the following forum area.
  48. 1 point
    Poor EoY results helped pushed the FTSE lower yesterday as miners sold off, whilst the White House threat for further Chinese tariffs had a negative impact on the S&P energy and industrial sector which also suffered. In the US the Fed decided to hold rates ahead of a likely September hike. Range remains in the 1.75 to 2 per cent channel. According to a US trade representative, the refusal of China to meet US demands, along with implementation of retaliatory tariffs on US goods, spurred the decision to increase the 10% tariff to 25% on $200bn worth of Chinese imports. After consecutive losses for the previous couple of days, oil prices rose over the last session as speculators look for a bounce. BoE widely expected to raise interest rates today. If a hike is confirmed from Threadneedle Street later today, this would only be the second this decade. Video from IGTV talking about the banks interest rate rises is below. Asian overnight: Trade war concerns have come back into focus to see Asian markets on the decline once again. Losses in Asian equity markets are substantial with China's Shanghai Composite down over 2% on the day. Chinese and Hong Kong stocks were the big losers amid a sea of red overnight, as markets reacted to the potential of the US to raise a 25% tariff on $200 billion worth of Chinese imports. Recent tones of dissatisfaction from the Chinese over US blackmail seem to have a basis in this threat, and with the Chinese importing nowhere near $200 billion worth of US goods, this raises questions over what their response will be. The main data point overnight came from Australia, where a sharp rise in the trade balance surplus highlighted the sharp deterioration in imports (-1% from 3%) rather than anything major on the exports side (3% from 4%). UK, US and Europe: Looking ahead, the UK PMI focus continues, with the construction sector under the microscope in the morning. That UK theme continues at midday, with the Bank of England widely expected to raise rates for the first time this year. A relatively quiet US session means that there will be a greater focus on wider economic issues and corporate earnings reports. With Caterpillar, Apple, and Tesla all out of the way, today sees reports from the likes of GoPro, Kellogg, and AIG. South Africa: US Index futures are also lower but to a lesser extent, and in turn we are expecting a soft start on the Jse Top40 Index today. The dollar has firmed and precious metals remain at depressed prices. Base metals trade mixed this morning. BHP Billiton is down 3.3% in Australia suggestive of a weak start for local diversified resources. Tencent Holdings is down 3% in Asia suggestive of a soft start for major holding company Naspers. Economic calendar - key events and forecast (times in BST) 9.30am – UK construction PMI (July): expected to fall to 52.5 from 53.1. Market to watch: GBP crosses 12pm – BoE rate decision: an increase in interest rates to 0.75% is possible, and would be expected, but given recent weakness in UK data the bank may yet demur once again. Markets to watch: FTSE 100/250, GBP crosses 1.30pm – US initial jobless claims: expected to rise to 220k from 217k. Market to watch: USD crosses Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades Barclays saw their H1 profits whittled away amid huge litigation costs and settlements eroded what would have been a 20% rise in pre-tax profits for the firm. Instead, pre-tax profits fell to £1.6 billion, from £2.3 billion after a circa £2 billion pay-out, which includes a £1.4 billion settlement with the US DoJ. Looking behind those charges, the company saw a strong performance, with the UK arm raising pre-tax profits by 30%. Aviva reported a 2% fall in operating profits compared with last year, with the firm citing the impact of disposals, tough market conditions in Canada and higher weather related claims for the fall. Despite this, they expect to see these trends to reverse in H2, with the firm remaining on track to hit their 5% growth target for the year. Their EPS number came in above market estimates, with an operating EPS of 26.8p (vs 25.1p expected). The dividend was increased by 10% to 9.25p per share. Rolls-Royce expects their 2018 earnings results to come in towards the upper end of its guidance range, following a stronger than expected showing from their civil aerospace and power systems businesses. This comes despite a £554 million charge for issues relating to their Trent 1000 engine, which has been shrouded by issues over their durability. That figure will cover the Trent 1000 issues up until 2022. On the earnings side, the firm saw underlying revenues jump 14%, with underlying profits rising by £205 million, to £141 million. Liberty Holdings (SA) Interim results showed normalised headline earnings per share to have increased by 6% Elementis upgraded to overweight at JPMorgan Asos rated new outperform at Wells Fargo Gamma Communications rated new buy at Citi Norma upgraded to buy at HSBC Macquarie upgrades AECI to outperform with a target price of 12800c Renaissance Capital upgrade African Rainbow Mineralsto buy with a target price of 15000c Shell cut to equal-weight at Morgan Stanley Sodexo downgraded to market perform at Bernstein Subsea 7 downgraded to underperform at Macquarie WDP downgraded to neutral at Kempen & Co Featured Video Please note: This 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.
  49. 1 point
    Trade war worries offset the gains seen in Wall Street with the Asian equity market struggling overnight. The trillion dollar valuation race between Apple and Amazon continues with Amazon tipping the $900bn valuation yesterday. GBP continues to take a beating against major world currencies as CPI data yesterday remained unchanged, reducing the likelihood of a rate hike in August. US banking shares continue to do good in earning season as Morgan Stanley profit jump. Oil prices remain volatile but fall amid record U.S. output and stockpiling continues to build. Have your say on which new cryptocurrency IG offer in our community poll. Asian overnight: Asian markets traded largely lower, as a breakdown in talks between the US and China highlighted the potential longevity of this recent trade war. However, despite the lack of any developments in trade negotiations, markets have largely taken the news in their stride, with losses proving relatively minimal. The Australian ASX 200 index was the one gainer overnight, despite a simultaneous rise in the AUD thanks to a batch of jobs data. A sharp rise in the employment change figure saw it rise to the highest level of 2018 thus far. UK, US and Europe: Global equity markets are trading mostly lower this morning although losses are marginal. While there appears to be no immediate and new economic catalysts to drive market movements this morning, US earnings remain a primary driver of equity markets right now. The dollar is slightly firmer and commodity prices modestly weaker this morning. Looking ahead, yet another important UK economic reading comes out in the form of the retail sales figure. With underwhelming jobs and inflation data, the expectations of an August rate rise are gradually easing, driving the pound lower. With the retail sales number expected to tumble from 1.3% to 0.1%, we could see yet another warning sign for the BoE today. In the US session, keep an eye out for the Philly Fed manufacturing survey, alongside the latest unemployment claims figure. South Africa: BHP Billiton is trading flat in Australia suggestive of a similar start for the South African listing of the company. Tencent Holdings is trading 0.6% lower in Asia, suggestive of a soft start for major holding company Naspers. A weak trading statement is expectant of a soft open for Woolworths, following on from a negative reaction yesterday to Shoprites trading update. Economic calendar - key events and forecast (times in BST) 9.30am – UK retail sales (June): forecast to rise 2.4% YoY from 3.9% and 0.4% from 1.3% MoM. Markets to watch: GBP crosses 1.30pm – US initial jobless claims (w/e 14 July), Philadelphia Fed mfg index (July): claims to rise to 217K from 214K, while the Philadelphia Fed index rises to 21.5 from 19.9. Markets to watch: US indices, USD crosses Source: Daily FX Economic Calendar Corporate News, Upgrades and Downgrades AO World said that Q1 revenue rose 8%, reflecting a strong start to the year in April and May, although demand was weaker in June. It remains on track to hit full-year expectations. Unilever sales rose 1.9% in Q2, below the forecast 2.2%. A Brazilian transport strike and weak performance hit pricing. Babcock expects low single digit underlying growth for the full year, versus a previous forecast of low mid-single digit growth. This was due to a slowdown in defence and marine work. Sports Direct said that full-year core earnings rose 12.2% to £306.1 million, ahead of forecasts of £296 million. Core earnings are expected to rise 5-15% in the next financial year. Buffet has won more power for share buy backs for Berkshire Hathaway if he feels the stock is undervalued. BRK gains 5.27% on the news. Lloyd’s loses market share in the uk mortgage space last year to RBS and HSBC. Although companies usually want to remain dominant in all forms of market share, reducing exposure, and therefore risk, to this particular market going into rising interest rates and Brexit may not be the worst thing. Adler Modemaerkte Upgraded to Buy at Oddo Salzgitter Upgraded to Buy at Goldman Ericsson Upgraded to Reduce at AlphaValue HelloFresh Upgraded to Buy at Bankhaus Lampe Alstria Office Cut to Underweight at JPMorgan BioMerieux Downgraded to Hold at HSBC Hypoport Downgraded to Hold at Berenberg Continental Downgraded to Hold at Bankhaus Lampe Featured Video from IGTV Please note: This information has been prpared 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.
  50. 1 point
    Expected index adjustments Please see the expected dividend adjustment figures for a number of our major indices for the week commencing the 25th of June 2018. If you have any queries or questions on this please let us know in the comments section below. For further information regarding dividend adjustments, and how they affect your positions, please take a look at the video. NB: Special Divs are highlighted in orange Special Dividends No special dividends expected this week. How do dividend adjustments work? As you know, constituent stocks of an index will periodically pay dividends to shareholders. When they do, the overall value of the index is effected, causing it to drop by a certain amount. Each week, we receive the forecast for the number of points any index is due to drop by, and we publish this for you. As dividends are scheduled, public events, it is important to remember that leveraged index traders can neither profit nor lose from such price movements. This 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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