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  1. US sees largest market fall in 8 months with the Dow Jones losing over 800 points in the main session. Asian markets followed suit with both Tokyo and Hong Kong down over 3%. The Taiwanese index was down 6% with the MSCI Asia Pacific average coming in at an average loss of 3.5% for the region The tech sector saw the biggest losses yesterday with FANG companies losing between 4-9% Oil saw its biggest 2 day loss since July as supply concerns continue. The US are set to announce their inventory levels later today Hurricane Michael has continued to batter the South-East coast of the country and is reportedly the largest hurricane to hit the area since 1992 but has now been downgraded to a tropical storm The Cryptocurrency market lost over $12 billion of market value after a period of relatively low volatility, something the asset class isn’t particularly known for. Bitcoin now stands 68% lower that it’s all time high. This comes amidst reports that theft of the digital currency has hit 1 billion in the last 9 months. Going into Thursday, volatility may continue with US CPI numbers being released. Bulls will be hoping to beat forecasts of 2.4% to help recover yesterday’s movements. Gold is likely move if there is a divergence from forecasts. The VIX pushed past 20 after yesterdays volatility. The dollar declined against all G-10 peers following the sell-off. Asian overnight: Chinese espionage tensions continue as the US accuses a Chinese operative of spying on US aerospace companies. Meanwhile, Trump has also lashed out at South Korea for not paying for the deployment of a missile defense system on the peninsula. The effects of the trade war are creating some interesting trade options, especially in the EM arena where price action is dictated by USD and CNH price action, industrial manufacturing and economic growth, and export deficits throughout the East. Notably the 25% tariffs imposed on the US has caused the price of Soyabeans (used for oils and meal) to skyrocket in Brazil, pushing suppliers to offload significant quantities of reserves pushing stockpiles dangerously low. Going forwards we could see buy side pressure from Brazil taking up the surplus now seen in the US. You can trade USDCNH, Soyabeans, EM currencies such as the Brazilian real, EM ETF’s and diversified trackers (linked to manufacturing, industrial production or soft commodities) all through IG. The fall in US Treasuries is particularly concerning to investors as bonds are seen as a safe haven during turbulent equity market movements. UK, US and Europe: The markets began their large decline around 12pm BST yesterday showing investors bearish attitude as the Dow remains near its all time high. Mortgage application rates falling for the second week in a row following the Feds interest rate hike gave the bears the ammunition then needed to begin the sell off. However mortgage providers fared fairly well compared to other sectors in the US. Tech took the brunt of the hit with some shares losing up to 10% , possibly suggesting that the trade war is likely to hit tech. Going into Thursday, the futures market implies the bearish attitude is likely to continue. Donald Trump has also blamed the fed interest rate for yesterday’s sharp fall. When asked if it could have been due to trade war tensions he stated there was no reason to raise interest rates and that the fed were acting ‘loco’. US Treasuries also saw a fall yesterday as investors began to sell causing yields to rise which can further influence consumer interest rates. This is particularly concerning to investors as bonds are seen as a safe haven during turbulent equity market movements. South Africa: Gold has struggled to find safe haven demand in the current equity market selloff and trades marginally lower this morning. Brent crude is under pressure despite hurricane Michael threatening the Gulf of Mexico and shutting down a lot of production within the area. Tencent Holdings is down 7% in Asia suggestive of substantial weakness to follow for major holding company Naspers (which has a 20% weighting in the Jse Top40 Index). BHP Billiton is down 3.8% in Australia suggesting a soft start for local resource counters. Economic calendar - key events and forecast (times in BST) Source: Daily FX Economic Calendar 1.30pm – US CPI (September): prices forecast to grow 2.8% YoY and 0.2% MoM, from 2.7% and 0.2% respectively. Core CPI to be 2.3% YoY from 2.2% and 0.2% from 0.1% MoM. Market to watch: USD crosses 4pm – US EIA crude oil inventories (w/e 5 October): stockpiles to fall to 5.08 million barrels. Markets to watch: Brent, WTI Corporate News, Upgrades and Downgrades WH Smith saw an overall rise of 2% in revenue for the year, to £1.26 billion, although the like-for-like figure was flat. Group profit from trading operations was up 3% to £163 million. The group has announced a restructuring of its high street division, closing some initiatives and shutting around six stores. Johnson Press is putting itself up for sale, following a strategic review of the business. Hargreaves Lansdown reported a 3% in assets for Q1, to £94.1 billion. 29,000 net new clients were added during the period. Jupiter reported a drop in assets under management to £47.7 billion for Q3, from £48.2 billion in the previous quarter. The fixed income division saw the bulk of the outflows. Tesla are looking to appoint a new chairman following controversy with Elon Musk and the SEC. Natixis confirms it is examining deal with French payment processing company Ingenico TechnipFMC Upgraded to Buy at SocGen Norsk Hydro Upgraded to Buy at Arctic Securities ElringKlinger Upgraded to Hold at DZ Bank Ferrari Downgraded to Hold at Jefferies Capgemini Downgraded to Neutral at Oddo BHF 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.
  2. 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.
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