Markets wary before earnings season

Equity markets remain at risk from sudden drops, as markets try to tread water ahead of earnings season.

The Gherkin
Source: Bloomberg

FTSE retreats from 6880

The time until earnings season gets into its stride seems awfully large this afternoon, as quickfire selling saw indices give back many of the gains from the latter part of last week.

The Germany 30’s 200 point move over the past week has been sliced unceremoniously in half, while the FTSE’s retreat from 6880 sounds a clear warning sign that investors still feel unhappy about moving above this level.

Only Federal Reserve minutes can really provide another boost to upward momentum, but that is still 48 hours away, leaving the market broadly vulnerable to some more adventurous shorting.

Dow holds on to 17,000

The Dow Jones is stubbornly holding 17,000 this afternoon, refusing to let go of its Independence Day gift to America. But the rule seen in other indices applies here too – positive upward catalysts are still absent, even if the negative ones have dissipated too for now.

Two or three days of selling would not be out of the ordinary, and if the price action of May and June has taught us anything, it is that no dip is too small to be bought.

A dovish set of Fed minutes could convince some nervous investors to enter the market, and it still remains a question of when, not if, S&P 2000 appears on price screens.

Gold slips below $1320

Gold’s slip below $1320 indicates once again how difficult it is for the metal to sustain rallies in an environment where equities are still the only place to be. Ukraine appears to be gaining the upper hand versus the separatists, and the ISIS tide has stalled for now, removing the few reasons that still existed for being in gold. Traders will be conscious of the last time gold failed at $1330, when the metal dived in short order back towards $1280.

GBP/USD loses ground

The pound has lost ground against the dollar and the euro today, but this is just the unwinding of positions rather than the beginning of a turnaround in these durable trends. Unless the UK experiences a major upset in coming months, and the chances of that look slim at best, the driving force of a stronger pound will resume in coming sessions, with the EUR/GBP target still the 2012 low sub €.78.  


IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.