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.
Rio Tinto shares testing £33 level
A lacklustre morning for the FTSE has given way to an even less impressive afternoon. We are continuing to shed the ground gained yesterday, and an apparent escalation of the situation in Ukraine is not helping. Ukrainian forces appear to have gone into action and, while the situation is confused, there are reports that Russian forces have been identified. Regardless of whether these things are true, the rumours are sufficient to ignite fresh selling.
Disillusionment with Rio Tinto results has set in this afternoon, and having rallied into the close yesterday we are now testing the £33 level that has halted the selling so far in April.
Intel and Yahoo set to report Q1 figures
We had a ‘Turnaround Tuesday’ of sorts today, as an initial move higher was swiftly wiped out. In the opening minutes it looked as if the Dow Jones was poised to build on yesterday’s gains, but this rapidly changed. The Ukraine situation is making its presence felt on Wall Street too, as traders are enacting their standard flight to safety routine, buying US Treasuries and sending the yield on these down as quickly as the stock market.
Reporting after the close will be Intel and Yahoo, two companies who have seen their dominance eroded in recent years. Intel is looking to Chinese tablet makers to help replace lost PC sales, while Yahoo shareholders will want to see if the firm can post its first revenue growth in four quarters, as well as finding out how Chinese giant Alibaba is faring. Volumes in the IG Alibaba grey market have been steady, and ahead of the IPO we are expecting a valuation of around $176 billion.
Silver probing February lows
A year ago to the day we saw gold undergo one of the most dramatic bouts of selling, taking the metal down 9% in one session. Today’s move can hardly have been as marked, but we did briefly drop below the $1300 level for the first time in a week, putting pay to the modest rally seen in April.
Silver is down too, probing levels not seen since the beginning of February. The headline risk associated with Ukraine will be driving all risk assets down, and if the selling continues we could be witnessing the start of a move back to $1280 for gold.
Aussie lower ahead of Chinese data
With commodities taking a beating today, the Australian dollar has been driven lower too. The 0.94c level has proven to be too much for AUD/USD, prompting the most significant losses in this currency pair since mid-March. The situation is likely to remain lively here as Chinese data arrives tomorrow. Chinese GDP, industrial production and retail sales are all on the agenda in the morning, and the news here could determine whether the Aussie can retest 0.94c or whether we see a continuation of this current downmove.