Poor German manufacturing fails to dent equity rally

Chris Beauchamp IG

In mid-morning trading the FTSE 100 is up ten points, while Royal Mail shares slump following a miserable trading update.

Bullish momentum continues to carry equities higher this morning, although strength has begun to wane as investors prepare for tomorrow’s non-farm payroll report. US markets are back at record highs, while the Dax seems prepared to follow suit, even if it is displaying further caution around the 13,600 mark, the peak of the past two years. Some of the strength in European markets will be down to the utterly abysmal performance of the euro this week, which has conspicuously failed to follow up on the strength displayed at the end of January, and has instead fallen right back to $1.10. It has held this level religiously since November, but with this morning’s dire manufacturing figures from Germany weighing heavily the outlook seems grim. Having already gained over 3% this week the FTSE 100 is beginning to look a touch exhausted, especially now the flow of good news out of China seems to have eased off, but having steadied itself this week we should see further upside for global indices from here.

Royal Mail had been gaining ground over the past nine months, but all that seems to have come to an end with this morning’s 10% fall. The shares have given up all their gains since June, and the bearish view seems justified given that management seem set on adding industrial strife to their existing problems. Perhaps such a tough approach will be the right one in the end, but it is not one likely to engender much confidence among investors.

Ahead of the open, we expect the Dow to start at 29,387, up 97 points from Wednesday’s close.

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.

AUD/USD bulls regain control above 0.6950 amid USD retreat

AUD/USD regains traction and extends the previous day's bounce from the weekly low, aiming for 0.7000 in Asia on Friday. The overnight pullback in US bond yields keeps the US Dollar below an 18-month high, which in turn offers some support to the pair. Meanwhile, hawkish RBA expectations also keep the major underpinned.

USD/JPY holds gains near 158.00 after Japan's weak Household Spending data

USD/JPY clings to gains around 158.00 after data showed on Friday that Japan's Household Spending fell for the ninth straight month, undermining the Japanese Yen. Meanwhile, the US Dollar remains depressed as the overnight fall in US bond yields counters a hawkish Fed and geopolitical uncertainties, could cap any downside in the pair.

Gold remains range-bound below $4,200

Gold has given up some ground after an initial bullish attempt to reach weekly highs, returning to below the $4,200 mark per troy ounce on Friday. The US Dollar’s strong upside momentum, combined with rising US Treasury yields across the curve, seems to keep further gains in the yellow metal under scrutiny.

Has Bitcoin really escaped the macro forces it was built to fight?

Over 17 years ago, Satoshi Nakamoto designed Bitcoin (BTC) on the back of a global financial crisis as an alternative to the global monetary system outside the control of central banks, governments and traditional intermediaries. This raises a key question: has Bitcoin really become independent of the macroeconomic forces it was built to challenge?

The Euro is not the sick man of Europe. France's bond market is

EUR/USD remains under pressure, near the 17-month low of 1.1161 reached on Monday. The pair has lost more than 7% since its yearly peak, as concerns over France's public finances increasingly weigh on the single currency. But behind the weakness of the Euro (EUR), the problem does not necessarily lie with the European economy as a whole.