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.
FTSE finds resolve to keep gains
The US open has given the FTSE the resolve needed to cling on to its gains, after it looked rather weak around lunchtime. On a day of little economic data the M&A news in the pharma sector, with Pfizer actively bidding for AstraZeneca, has been a primary driver, although I question how long it can be used as an excuse for increasing exposure to equity markets.
Departing BG chief executive Chris Finlayson will have been comforted this morning by the sharp drop in the share price, but as the day has gone on the buyers have come back in, assiduously closing the gap seen at the beginning of trading. Once the headline news has cleared, the rest of BG’s update will offer little comfort; the new boss will have to get a firm grip if he is to reverse the declining trend in production that has hobbled the share price all year.
Dow within reach of 16,600
The week has started quietly in economic terms, but US markets have nonetheless put their best foot forward, recovering much of the ground lost on Friday. The Dow Jones is, yet again, within easy reach of the magic 16,600 level that has stunted progress a number of times already, while S&P 500 bulls will be wondering if they can squeeze in a rally to 1900 before non-farms throw a spanner into the works. The worry was that new sanctions on Russia might cause investors to keep their powder dry, but it seems that markets are content to let the politicians trade sanctions and rhetoric, as long as it goes no further than that.
Gold and Silver suffer losses
A revival in risk appetite has hit gold and silver, with both registering heavy losses for the day. Gold held above $1280 last week but it seems we are in for a retest of those levels once again. The focus of events will now be on the Federal Reserve meeting this week – no change is expected from this quarter, but any hint that the Fed is nervous about the underlying state of the US economy could see the buyers return. Copper, meanwhile, is building on the impressive session witnessed on Friday, reaching a fresh seven-week high around $3.12 per pound.
USD/JPY close to recent highs
USD/JPY has risen in tandem with equity markets yet again, providing the only real excitement in the FX sphere today. Like equity markets, we are back within touching distance of recent highs, with ¥102.80 marking the highpoint of last week’s rally. Non-farms this week are generally predicted to show a pick-up in job growth in the US, which could provide the needed impetus to see the currency pair touch ¥104 again.