Catalonia result knocks European equities

Chris Beauchamp IG

A new record for the FTSE 100 contrasts with weakness in Europe following the Catalonia result.

The FTSE 100 is finishing in suitably festive fashion, having carved out a new record high this morning. Meanwhile in Europe the atmosphere is less convivial, as risk assets take a knock following the Separatists’ narrow victory in the Catalonia poll yesterday. 2017 saw a number of political risk events, but none have been quite as interesting or as durable as the Catalonian issue. This, perhaps more than Brexit, threatens to be the problem to watch in 2018. European stocks have not managed to outperform their US counterparts in 2017, instead lagging by about 50%. Once again following the crowd into European markets did not produce the expected stellar return, but a 14% return is still not to be sniffed at.

Next week promises to be a quiet one, as the corporate calendar dries up and the economic schedule is quite bereft. Now tax reform is out of the way, the last question for the year is, will the Dow hit 25K? At present, it seems unwilling to move higher, but given the light volumes of next week there is still a chance to pull one more rabbit from the hat.

Author

Chris Beauchamp

Chris Beauchamp has been with IG for four years, and in that time has become a regular commentator and analyst for the financial press and TV, with appearances on all the major financial channels as well as the BBC and Sky News.

GBP/USD hits multi-week tops around 1.3560

GBP/USD gathers fresh steam and advances to new three-month peaks near the 1.3560 zone on Friday. Cable’s sharp move higher comes after three daily drops in a row and follows the increasing selling pressure hurting the Greenback.

EUR/USD pops to fresh two-month highs, targets 1.1600

EUR/USD advances markedly, revisiting the upper 1.1500s for the first time since mid-June. The pair’s sharp uptick comes on the back of a strong retracement in the US Dollar amid BoJ intervention chatter and despite steady uncertainty in the Middle East.

Gold picks up pace, approaches $4,400

Gold rebounds toward the $4,400 mark per troy ounce on Friday, reversing the previous day’s pullback. The precious metal’s recovery comes as fresh and intense weakness keep weighing on the US Dollar, while traders keep assessing easing expectations of an imminent Fed interest rate hike and the situation from the Middle East.

Pi Network Price Forecast: PI extends consolidation as bulls eye $0.10

Pi Network (PI) price holds steady on Friday, maintaining a consolidating tone for three consecutive days. Mild retail strength in the PI token remains stable, with Open Interest above $9 million, while social buzz eases. PI token’s technical outlook is mixed, as bearish momentum wanes to neutral, with bulls eyeing the $0.1000 psychological level.

Weekly focus: Some relief in US inflation concerns

Actual inflation data for July came out as expected with a 0.1% m/m increase in headline CPI and 0.2% excluding food and energy. Annual headline inflation remains too high at 3.4% and means that wage earners are experiencing stagnating spending power at best, and core inflation is a bit higher than the inflation target of two percent would suggest.

Why is Crude Oil priced for a reopening the ships haven't made?

Fourteen vessels crossed the Strait of Hormuz on Tuesday. Before the war, the count ran near 120 a day. In the sessions since the waterway was publicly declared open, Brent has drifted back to $87 and West Texas Intermediate (WTI) to $81, both a little lower again on Wednesday, with daily momentum on each unwound from the top of its range in late July to the low twenties now.