Trader's thoughts - All eyes on the UK with Brexit drama

It’s more-or-less crunch time for UK Prime Minister Theresa May and her wildly unpopular Brexit bill. A series of votes before the House of Commons to decide on what the UK will do come March 29.

Market data Source: Bloomberg

Up, down, turnaround

It’s been a bipolar market of late. Global stocks are moving in unison, and have swung from broad-based losses on Friday, to broad-based gains overnight. US equities are naturally the exemplar and are a responsible for driving overall risk appetite. With an hour left in trade (and as a quick aside, Wall Street closes at 7am AEDT for the next few weeks) the S&P 500 is up well over 1%. It’s been a day of relatively low activity. However, breadth is expansive: over 90% of stocks are higher for the session. After last week’s losses, the S&P 500 is some way from the key resistance at 2815. The fundamental strength of the market will be assessed by its ability to rechallenge that level.

ASX to hit the ground running

It was topsy-turvy yesterday, as far as the ASX’s behaviour went within the context of the global rally in equities. Unlike during stages of last week, the ASX 200 was a thin-cut of red in an otherwise sea of green, when looking at the global equity index map. Australian stocks will join the party this morning, and according to the SPI Futures contract, will bust out of the gate at today’s open with a 34-point rally. Inducing from European and North American trade what we might see today: materials stocks may follow their international counterparts, energy stocks may track a lift in oil, and Australia’s growth stocks in the biotechnology industry should follow US tech’s run higher.

US economic fundamentals

US economic data is dense this week, and what it suggest about the US economy will be a theme to watch in the week ahead. After all: growth in the US economy is what many are hanging their hat on to keep global economic activity supported. Retail Sales data last night was the first high-impact event for the week, and it surprised to the upside. Although January’s woeful figure was revised down again, sales growth in February beat expectations. The result didn’t change fundamentals, though they did shift slightly. US Treasury yields lifted modestly, on reduced bets that the US Fed will have to cut interest rates at some stage in 2019 to support the US economy.

US inflation risk

The far more important US CPI figure is released tonight – and will probably amount to highlight for the week in US data. Inflation concerns have become less-of-a-priority for traders recently, owing to the volatility in financial markets, relatively low oil prices, the dimming prospects for global growth, and the US Fed’s assurances that it does not mind overshooting its 2% inflation target. Nevertheless, inflation risk always reigns – and, if realized, would be quick to quash equity market bullishness. In saying this, the implied probability of this materializing ought still to be considered low. US 5 Year break evens are implying a US inflation outlook of only about 1.85%.

3-days of Brexit drama

Though US data is an overarching theme this week, the eyes of the world will probably be on the UK for the next 3 days. It’s more-or-less crunch time for UK Prime Minister Theresa May and her wildly unpopular Brexit bill. A series of votes before the House of Commons to decide on what the UK will do come the March 29 Brexit deadline will transpire over the coming days. Crudely put, they’ll determine whether to leave the Eurozone according to Prime Minister May’s deal (unlikely); crash-out of the Eurozone without a deal (a possibility); or extend the Brexit deadline and kick-the-can further down the road (likeliest). The Sterling will be the barometer: short-term moves between the 1.28 and 1.34 handle is conceivable.

Mixed growth signals

For financial markets, Brexit’s macro-economic impact will probably be contained to UK and European assets. Rightly or wrongly, the view is that the matter concerns regional markets, primarily. Fears about slowing global growth will remain a theme overlayed in the market, nevertheless. And judging from last night’s trade, despite the bullishness in equities, fixed income and currencies, pockets of pessimism still prevail. Growth sensitive commodities, primarily industrial metals, were down overnight, even in the face of a weaker USD. From a technical standpoint, industrial metals prices are reaching technical trend-line support. If broken below, it may indicate that the market’s flirtation with improved global growth conditions was a mere folly.

China’s got the gold-bug

The always contentious outlook for gold prices was of interest overnight, amid the sell-off in commodities and the confused global growth outlook. Gold pulled away from the $1300 pivot point once more, courtesy of the rise in global yields. An arguably more interesting and significant variable in gold's broader price action was a highlight yesterday: data that revealed China once again increased its reserves of the metal last month. The most parsimonious explanation here for this phenomenon is that, like the Russians, China is looking to reduce its dependence on the United States by diversifying away from USD denominated assets. It's a direct challenge to the post-Bretton Woods global monetary system, and one that may support gold prices into the future.


Denne informasjonen har blitt forberedt av IG Europe GmbH og IG Markets Ltd (begge IG). I tillegg til disclaimeren nedenfor, inneholder ikke denne siden oversikt over kurser, eller tilbud om, eller oppfordring til, en transaksjon i noe finansielt instrument. IG påtar seg intet ansvar for handlinger basert på disse kommentarene og for eventuelle konsekvenser som et resultat av dette. Ingen garanti gis for nøyaktigheten eller fullstendigheten av denne informasjonen. Personer som handler ut i fra denne informasjonen gjør det på egen risiko. Forskning gitt her tar ikke hensyn til spesifikke investeringsmål, finansiell situasjon og behov som angår den enkelte person som mottar dette. Denne informasjonen er ikke utarbeidet i samsvar med regelverket for investeringsanalyser, så derfor er denne informasjonen ansett å være markedsføringsmateriale. Selv om vi ikke er hindret i å handle i forkant av våre anbefalinger, ønsker vi ikke å dra nytte av dem før de blir levert til våre kunder. Se fullstendig disclaimer og kvartalsvis oppsummering.

Realtidskurser på våre mest populære markeder

  • Valuta
  • Aksjer
  • Indekser
Selg
Kjøp
Oppdatert
%-Endring
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
Selg
Kjøp
Oppdatert
%-Endring
-
-
-
-
-
-
-
-
Selg
Kjøp
Oppdatert
%-Endring
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-
-

Kursene ovenfor er underlagt nettstedets vilkår og betingelser. Kursene er kun veiledende. Alle aksjekurser er forsinket med minst 15 minutter.

Kanskje du også er interessert i...

Beregne dine potensielle tradingkostnader med vår transparente avgiftstruktur.

Finn ut hvorfor så mange kunder velger oss og hva som gjør oss til en verdensledende leverandør innen CFDer.

Være forberedt på kommende markedsbegivenheter med vår økonomiske kalender.

CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring. 74 % av alle ikke-profesjonelle kunder taper penger på CFDer hos denne leverandøren. Du burde tenke etter om du forstår hvordan CFDer fungerer og om du har råd til den høye risikoen for å tape penger. Profesjonelle kunder kan tape mer enn sitt opprinnelige innskudd. Opsjoner er komplekse finansielle instrument og du risikerer kapitalen din. CFDer er komplekse instrumenter som innebærer stor risiko for raske tap på grunn av giring.