Markets remain under pressure ahead of Alcoa’s results tonight and Federal Reserve minutes tomorrow, as the unwinding of last week’s gains continue.
UK markets
The FTSE is busily confounding bulls and bears alike, swinging higher one week and then sharply lower the next, as the post-2009 trend fizzles out. With the long weeks of summer stretching out before us, the grim reality is that such trading will probably be the norm until September when normal service resumes. Airline stocks remain out of favour due to the Air France KLM warning this morning, as IAG drops to levels not seen since November, while Shire slumped despite news that AbbVie had raised its bid for the firm by 11% from the previous rebuffed offer. Judging by the price reaction, it seems this bid will fail too.US markets
A second consecutive down day in US markets has seen the gains of last week eroded, and a renewal of calls for a correction. Still, it is more a combination of uncertainty ahead of earnings season and the usual dire summer volumes. Another day or two of losses would be in line with recent price action, and may well act as a call for buyers to step back in again. S&P 2000 is still not that far away, even if it seems a like more distant prospect than was the case at the end of last week.Commodities
Brent crude’s decline has not stopped for nearly two weeks, as supply fears disappear for the time being. With the 200-day moving average now in sight the bulls need to step up to keep the commodity from slipping back through $109. Traders have got over their supply-related jitters and have seen fit to undo all the rally from early June. A see–saw trade in gold has seen the commodity dance around $1320 today, as it has done for over two weeks, but we will need to see a real breakout from the $20 range that has been the norm for over two weeks now before a real trend can be said to established itself.FX
The market rubbed its eyes in disbelief this morning at weaker UK economic data, quite a novelty these days when we have become used to figures beating expectations. Even so, the world continues to turn and the rally in GBP/USD doesn’t look under threat at the moment. The data only reinforces the Bank of England’s view that rate hikes are premature, but even some more losses back towards $1.70 would still likely be viewed as a pullback and buying opportunity.
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