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 firmly in the red
Hit by ex-dividend stocks and weaker airlines, the FTSE 100 languishes in the red. It is becoming increasingly difficult to believe that this market will see 6930 in the near future, having begun to inexorably falter the closer it gets to 6880. Previous guarded bullishness has given way to increased caution, making it increasingly likely that we see a retest of 6800.
At least Sainsbury’s investors have been in receipt of positive information today, and the stock has reacted accordingly. However, the good news is now firmly in the price, and the chain will need to keep the better news coming if it is to retain the lead over Tesco.
US markets under pressure
It looks as if US indices are still working off their overbought condition, with the Dow Jones and S&P 500 looking more seriously under pressure today than has been the case for a number of sessions. Even so, a push back towards the 200-day moving average would barely qualify as half a correction, and would likely fire the starting gun on another ‘buy the dip’ session for investors. Top calling and ‘Minsky moments’ are all the rage at the moment, but a run to 17,000 on the Dow is still the default position so long as we remain above 16,400.
Gold continues its uptrend
Yet again NYMEX prices have shown a distinct reluctance to move in the direction of $105. Indications are that US supplies dropped last week, so the commodity is finding some support. However, with the OPEC meeting out of the way there seems little desire to push oil above its current levels, with a correction towards $104 and then on to $102.70 the likely outcome at present.
Gold has seen modest buying, continuing the short-term uptrend, but with inflation expectations remaining low there seems little rationale for holding gold as a hedge, and with the horizon mostly free of dark geopolitical clouds the commodity should struggle, even if it does see a return to $1300.
GBP/USD finds buyers
GBP/USD has held on to gains made in the wake of UK unemployment figures this morning, setting the stage for a potential rebound towards $1.6820 and then on to the May highs just below $1.7000.
The UK’s economic data has trended almost entirely in a positive direction in recent months, and investors have factored this contrast into their assessments of the outlook for the various central banks. A Bank of England rate hike is still some way off, but it is much closer in time than equivalent actions for the Federal Reserve and the European Central Bank.