Jasper Lawler,CMT
London Capital Group
Record winning streak for the FTSE 100
The FTSE 100 extended its winning ways, earning a ninth consecutive record close for the first time in its history. The UK was crowned the fastest growing economy in the G7 last year and the drop in the pound has given top British businesses the competitive edge to take advantage. In 2016 it was British Olympians doing the record-breaking; in 2017 so far it’s been the stock market.
The desire to invest in UK plc is not only to be seen in public markets. Billion-dollar start up Snapchat will setup its international headquarters in the UK to tap into its vibrant tech scene.
Blowout Christmas sales results from Morrisons and data from Kantar showing Tesco leading the fightback against the discounters meant Supermarkets were leading the charge. The pound near decade lows, which boosts foreign earnings and a rise in metal prices, meant mining company shares were top risers. Insurers Admiral and direct Line were propping up the UK benchmark.
Mayer exit welcome by Yahoo investors
It’s never a great sign for your legacy when shares move higher as you step down from the board. Investors reacted positively to the news Marissa Mayer will step down from the Yahoo board. She will remain CEO for now. Mayer’s removal from the board is a likely precursor to her getting the boot as chief exec. Activist shareholders are starting to get their way. Faith has long been lost in Mayer’s turnaround plan for Yahoo and her exit is a matter of when not if.
In Ms Mayer’s defense, the positive share price reaction can be otherwise explained. The public announcement of the changes in the board of directors and a re-branding is a good sign the Verizon deal will go through despite the large hack of Yahoo account holders. The less said about Yahoo!’s re-branding to ‘Altaba’ the better.
Oil drops with bulls getting stretched
Brent and WTI crude oil prices gave up early gains to slip to fresh two week lows. The crude rally is coming undone because traders got too bullish too fast. At the end of December speculators were the most bullish on record and that couldn’t last. Doubts that some OPEC nations, specifically Iraq will live up to their promised output cuts has been the impetus for funds to pare back long positions in oil. Iraq has reduced its production by 160k a day and will eventually meet its promise of cutting 220k according to its oil ministry, but loading data suggest its exports will rise.
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Gold stabilized near $2,380 after spiking above $2,400 with the immediate reaction to reports of Israel striking Iran. Meanwhile, the pullback seen in the US Treasury bond yields helps XAU/USD hold its ground.
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