Europe

It’s been a decent end to the week for markets in Europe with the FTSE100 hitting a one month high after edging above 7,120 for the first time since 10th May, with the FTSE250 also doing well after experiencing three days of losses. It’s certainly helped that today’s UK economic data showed the economy grew by 2.3% in April, with services activity driving most of the improvement.

The more positive tone has also manifested itself with another record high for the Stoxx600, as markets across Europe finish the week very much on the front foot.

Some sectors have lagged, notably financials which are seeing a little bit of underperformance on the back of softer bond yields, with the UK gilt yield trading down at a three-month low of 0.69%, before rebounding.

Other underperformers have been in the travel and leisure sector, as delays to reopening prompted British Airways to put some of their staff back on furlough, while the likes of Cineworld and Wagamama’s owner Restaurant Group down again for the second day in succession as fears grow that next week’s announcement of a wholescale 21st June unlock becomes less likely.

BT Group has also slipped back after yesterday’s gains with some reports suggesting that new shareholder, Altice’s Patrick Drahi could press management to spin off Openreach which is very much the jewel in the BT crown. While there is no question that Openreach is worth more as a separate entity BT management would be foolhardy in the extreme to hive off their best asset and hollow out the rest of its business in the process. It is very much a case that BT is worth more than the sum of its parts. It would also be highly disruptive at a time when high speed broadband rollout is such a key component of the UK’s economic strategy over the next 5-10 years.

On the plus side basic resource stocks are the best performers with the likes of Glencore and Antofagasta outperforming, due to a rebound in copper prices. Anglo American’s spun off coal operation Thungela Resources also looks set to finish a roller-coaster first week of trading with a positive end to the week.

US

US markets initially picked up where they left off yesterday with the S&P500 hitting yet another record high in the opening half hour, however the lack of momentum appears to hampering significant progress to the upside with some profit taking kicking in ahead of the weekend.

On the data front the latest University of Michigan inflation expectations survey showed an unexpected fall to 4% on a one-year basis. This appears to lend support to the idea that the sharp rises we’ve seen in prices over the past few months is likely to be transitory in nature. Despite this, US bond yields have rebounded from three-month lows of 1.4270%, although we are still set to finish the week with yields sharply lower.

Once again, we’ve seen the likes of GameStop and AMC take centre stage, rebounding from the big falls we saw yesterday, while drugmaker Vertex Pharmaceuticals shares fell sharply after the company halted development of a drug designed to treat a rare genetic deficiency.  

As far as the major benchmarks are concerned pharmaceuticals are underperforming, with Amgen and Johnson and Johnson lower, with McDonalds leading the Dow gainers.   

FX

Currency markets have continued to range trade, although the pound has continued to hold up reasonably well, although it is down against the US dollar.

Today’s UK April GDP numbers were broadly in line with expectations, though there was some disappointment around the industrial and manufacturing production numbers which weakened unexpectedly. Nonetheless, despite concerns about a delay to the 21st June economic reopening the general feeling is that it will merely be a delay as opposed to a cancellation.

The US dollar also appears to be finding some support as we head into the weekend, and ahead of next week’s Fed meeting, where the current weakness in yields might give the Fed some room to be slightly more hawkish than expected when it meets next week.     

Commodities

Oil prices have continued to move higher this week with Brent hitting its highest levels in over two years. Gold has made little progress this week despite the weakness in US yields which ordinarily helped provide it with support.

Copper prices have found some support after hitting a one week low, and trend line support from its February lows yesterday.

After looking as if they might crash below $30k earlier this week, bitcoin prices look set to finish the week higher, a remarkable turnaround given the bearishness seen at the start of the week.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 70.5% of retail investor accounts lose money when spread betting and/or trading CFDs with this provider. You should consider whether you understand how spread bets and CFDs work and whether you can afford to take the high risk of losing your money.

Recommended Content


Recommended Content

Editors’ Picks

USD/JPY pops and drops on BoJ's expected hold

USD/JPY pops and drops on BoJ's expected hold

USD/JPY reverses a knee-jerk spike to 142.80 and returns to the red below 142.50 after the Bank of Japan announced on Friday that it maintained the short-term rate target in the range of 0.15%-0.25%, as widely expected. Governor Ueda's press conference is next in focus.  

USD/JPY News
AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD bears attack 0.6800 amid PBOC's status-quo, cautious mood

AUD/USD attacks 0.6800 in Friday's Asian trading, extending its gradual retreat after the PBOC unexpectedly left mortgage lending rates unchanged in September. A cautious market mood also adds to the weight on the Aussie. Fedspeak eyed. 

AUD/USD News
Gold consolidates near record high, bullish potential seems intact

Gold consolidates near record high, bullish potential seems intact

Gold price regained positive traction on Thursday and rallied back closer to the all-time peak touched the previous day in reaction to the Federal Reserve's decision to start the policy easing cycle with an oversized rate cut.

Gold News
Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

Ethereum rallies over 6% following decision to split Pectra upgrade into two phases

In its Consensus Layer Call on Thursday, Ethereum developers decided to split the upcoming Pectra upgrade into two batches. The decision follows concerns about potential risks in shipping the previously approved series of Ethereum improvement proposals.

Read more
Bank of Japan set to keep rates on hold after July’s hike shocked markets

Bank of Japan set to keep rates on hold after July’s hike shocked markets

The Bank of Japan is expected to keep its short-term interest rate target between 0.15% and 0.25% on Friday, following the conclusion of its two-day monetary policy review. The decision is set to be announced during the early Asian session. 

Read more
Moneta Markets review 2024: All you need to know

Moneta Markets review 2024: All you need to know

VERIFIED In this review, the FXStreet team provides an independent and thorough analysis based on direct testing and real experiences with Moneta Markets – an excellent broker for novice to intermediate forex traders who want to broaden their knowledge base.

Read More

Majors

Cryptocurrencies

Signatures