Financial stocks lead the losses

Stock markets recouped a small portion of the early morning losses but overall it was a tough day for equities. 

Source: Bloomberg

Equity markets worked very hard to try and make up the ground that was lost in the morning session. The bounce back in the latter half of the trading session pales in comparison to the heavy losses that were sustained shortly after the market open.

Traders are losing faith in central banks’ ability to bring stability to their respective economics and stock markets. Janet Yellen has her second day of testifying in Capitol Hill and the Federal Reserve chair refused to rule out negative interest rates.

There is no suggestion that the US central bank is considering going down that route but it gives an indication of what tools are available. The very mention of negative rates will keep pressure on equity markets, and while the FTSE 100 is under 5600, its outlook will be bearish.

The downward trend that the US 500 and Wall Street have been in since early February still stand and bounces could see more bears enter into the fold.

EUR/USD continues to creep higher due to the dollar’s weakness. The upward trend is still in place and buying the dip has been a popular strategy. The bulls will be looking towards $1.14 and while it holds above the support of $1.1252 it is a possibility.

Gold is reaping the rewards of the risk-off strategy and the precious metal is currently at a one-year high. The weakness in the US dollar and the fear in stock markets is fueling the buying. If the metal holds above $1229 additional a continuation of the upward trend is possible.

Oil is still heading south and the bears will be looking toward $30 on Brent and sellers will be keeping an eye on $27.58 for US light crude. 

FTSE 100 risers and fallers (as of 4.35pm)

Company % change Index points
Randgold Resources Ltd +7.54 +1.54
Fresnillo +5.42 +0.29
DCC +4.29 +0.73
Imperial Brands +1.96 +2.57
Rolls-Royce Holdings +0.38 +0.14


Company % change Index points
Prudential -7.53 -8.75
Aberdeen Asset Management -7.39 -0.63
Barclays -7.01 -7.23
Glencore -6.22 -2.63
BP -6.01 -14.03

The look ahead to tonight

Economic data:

10.30pm: RBA Governor Glenn Stevens speaks

The look ahead to tomorrow:

Corporate reporting:

UK: Rolls-Royce 

Economic data:

7am – German GDP (Q4, flash) and CPI (final, January): GDP QoQ exp 0.3%, prior 0.3%. GDP YoY exp 1.4%, prior 1.7%. CPI MoM exp -0.8%, prior -0.8%. CPI YoY exp 0.5%, prior 0.5%.

10am – eurozone GDP (Q4, flash): MoM exp 0.3%, prior 0.3%, YoY exp 1.5%, prior 1.6%.

1.30pm – US retail sales and core retail sales (January): retail sales exp 0.1%, prior -0.1%. Core retail sales exp 0.3%, prior 0.0%.

3pm – US Michigan consumer sentiment (February, preliminary): exp 92.3, prior 92

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