UK Market Comments


It might be stormy in London, but the 'No' vote in Scotland and fresh gains on US indices mean that most traders are in a sunny mood as the weekend approaches.

UK markets

Scotland's referendum has upended the UK's constitutional order, but it is clear that equity markets are not particularly bothered about the political implications of further devolution for Scotland and the other UK nations. Although the FTSE has not been able to sustain gains in the direction of 6900, it is still enjoying something of a bounce as investors in companies with heavy Scottish exposure heave a sigh of relief that currency and contract wrangles are off the agenda. Traders seem to be finding a Scottish angle on most FTSE 100 companies today, and are undoubtedly pleased that this one hurdle to further progress has been eliminated. The FTSE 100 has lagged behind its peers in developed markets this year, up 1.5% versus 3% for the Dax and 9% for the S&P 500. Now would be the ideal time for the index to play catch-up, especially with a declining pound to flatter earnings figures.

US markets

US indices clocked up fresh record intraday highs today, building on yesterday's gains, making this week one of the best in this quarter. Quadruple witching today will have boosted the activity across indices, but the week sees markets ending in a positive frame of mind thanks to the dovish Fed statement and the rejection of the separatist cause in Scotland. All eyes are on Alibaba, which begins its life as a listed entity with expectations of a strong start to trading. Initial expectations were for a starting price of $68 per share. This has now moved up closer to $90 with IG's grey market almost exactly on the nose, having expected an opening price of $88 per share. This would mean a market capitalisation of circa $230bn, the same size as JP Morgan and bigger than IBM and Oracle. Now the hard part begins for Alibaba - it has arrived on a wave of enthusiasm, but investors expect much from the firm, and a failure to deliver will leave a very sour aftertaste.

Commodities

Precious metals are heading for the lows of the week once more, as the futility of holding gold in such a low-inflation environment that is almost tailor-made for equities becomes apparent. Neither gold nor silver is showing any inclination to work off their oversold conditions, even with both metals losing over 5% so far this month. In oil, contango in the futures markets means that oil firms are storing the commodity in tankers offshore, with the amount held on the seas moving back to levels not seen since April 2009. It would be difficult to find a clearer demonstration of oversupply in this market, and until the major producers decide to slash output this dysfunctional state of affairs
will continue.

FX

Sterling's relief rally against the US dollar was even more short-lived than the 'Yes' camp's hope of victory in Scotland last night. Having touched $1.65, the pound is now in retreat, dropping back down towards $1.63 as economic fundamentals reassert themselves. Scotland's decision to retain their historic ties with the rest of the UK may mean that a 2015 rate hike by the BoE is more likely, but it is the dollar that reigns supreme at present and will mean that GBP/USD remains on course to hit the month-lows around $1.61.

Recommended Content


Recommended Content

Editors’ Picks

AUD/USD holds above 0.6500 in thin trading

AUD/USD holds above 0.6500 in thin trading

The Australian Dollar managed to recover ground against its American rival after AUD/USD fell to 0.6484. The upbeat tone of Wall Street underpinned the Aussie despite broad US Dollar strength and tepid Australian data.

AUD/USD News

EUR/USD comfortable below 1.0800 lower lows at sight

EUR/USD comfortable below 1.0800 lower lows at sight

The EUR/USD pair lost ground on Thursday and settled near a fresh March low of 1.0774. Strong US data and hawkish Fed speakers comments lead the way ahead of the release of the US PCE Price Index on Friday.

EUR/USD News

Gold pulls away from daily highs, holds above $2,200

Gold pulls away from daily highs, holds above $2,200

Gold retreats from daily highs but holds comfortably above $2,200 in the American session on Thursday. The benchmark 10-year US Treasury bond yield stays near 4.2% after upbeat US data and makes it difficult for XAU/USD to gather further bullish momentum.

Gold News

Google starts indexing Bitcoin addresses

Google starts indexing Bitcoin addresses

Bitcoin address data is live on Google search results after users realized on Thursday that the tech giant started indexing Bitcoin blockchain data. However, mixed reactions have followed the tech giant's reversed stance on the cryptocurrency.

Read more

A Hollywood ending for fourth quarter GDP

A Hollywood ending for fourth quarter GDP

The latest revisions put Q4 GDP at 3.4%, the second fastest quarterly growth rate in two years. Much of the upside was attributable to stronger consumer spending, yet fresh profits data affirmed it was a good quarter for the bottom line as well with profits up by the most since the Q2-2022.

Read more

Majors

Cryptocurrencies

Signatures