Markets Overview: (Source: Bloomberg, FT, Reuters, DJ Newswires)
FTSE 100 Index called to open +50pts at 7515, almost completing last Thurs/Fri’s bullish flag rebound from 5-week lows at 7380. Bears highlight falling highs resistance at 7525, potential capping the bounce. Bulls point to the overnight break above 7500 intersecting resistance. Bulls need a break above falling highs at 7525, bears a break below 7500. Watch levels: Bullish 7530, Bearish 7500.
A positive opening call comes as traders welcome another Macron victory in France, this time in Parliamentary elections, which give hope to him passing reforms that can help both the French economy and thus Europe. There is also optimism about a positive start to UK-EU Brexit negotiations which kick off today in Brussels. The GBP may be off its lows, but not proving a FTSE hindrance yet.
Just as the UK’s grocers were hit Friday by fears of more intense competition from Amazon after its acquisition of Whole Foods, the same is true down under, where Amazon has made a recent push. Australia’s ASX retailers therefore holding the index back overnight along with Energy.
Solid Chinese Property Price data, however, in spite of governmental cooling measures to avoid a bubble bust, may be helping the Aussie index outperform in Asia overnight, coupled with buoyancy for metals prices and their Miners.
Japan’s Nikkei is buoyed by fresh Yen weakness versus USD, EUR and GBP following trade data showing Exports growing more slowly than expected in May and Imports growing faster. Oil holding around recent lows is also weighing in Energy. UK investors may want on keep an eye on UK housebuilders this morning after disappointing Rightmove House Price data overnight.
US equity markets were mixed on Friday to finish the week, with notable divergence between indices. The Dow Jones closed at another fresh record high as Energy stocks offset significant losses for Wal–Mart after Amazon’s $13.7bn offer for Whole Foods. The S&P500 followed suit, closing just above flat as Energy names offset losses for Consumer Stables, while the Tech-focused Nasdaq continued to underperform peers.
Crude Oil prices have fallen from Friday’s recovery highs after the Baker Hughes Rig Count notched its 22nd consecutive weekly increase, however both major benchmarks have avoided falling to fresh 7-month lows during Asian trading. An overnight bounce from $47.10 (Brent) and $44.50 (US) has seen a test of falling highs resistance on both measures, although no comprehensive breakout has been mounted.
Gold is trading close to the floor of a tight $1251-$1257.50 trading channel which emerged on Thursday, having fallen from overnight highs of $1256 on account of brief dollar strength. As the greenback has come off its highs, however, the precious metal is subsequently off its worst level. FX movements could provide a significant break either side of the tight channel limits. Bulls will be looking for falling highs resistance at $1252.50 to give way while bears want to see anything below $1251 for fresh 4-week lows.
Today’s headline event will be the start of official Brexit negotiations with British and EU diplomats beginning the painstaking task of unravelling almost five decades of integration. Nothing ground breaking is expected for some time however, with detailed talks still to come. Today is considered a trust-building exercise, each side officially tabling demands to kick off an already delayed process working towards a concrete deadline (March 2019). Any sound bites have potential to keep markets (FTSE, DAX, GBP, EUR) on their toes.
The macro docket today is strikingly light with Eurozone Construction Output (10am), looking to avoid a second month of slowing, being the only release of note. As a result, speakers will drive this afternoon’s US session with New York Fed Governor Dudley (1pm) likely offering the first dovish insight into stateside monetary policy.
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UK Company Headlines: (Source: Reuters/DJ Newswires)
- France’s Europcar to acquire low – cost rival Goldcar
- Cairn Energy issues update on India tax dispute
- Rockpool Acquisition to list on London’s main market
- Amec Foster Wheeler says unit signs equipment contract
- Innovaderma sees FY revenue and profits to be well ahead of expectations
- Avanti says signs 2 – yr contract worth $4.5m
- Co – Operative Bank says in rescue discussions with investors
- Workspace says to sell Residential Redevelopment in Bow
- Gold hits near four – week low as dollar firms
- Oil prices dip on further rise in U.S. drilling, demand slowdown