Positive session for equities

Chris Beauchamp IG

Brexit fears have hobbled the FTSE 100, which is lagging behind other indices as equities push higher.

Trade and government shutdown hopes lift the mood
Equities recover from last week’s downside
UK stocks show ‘no deal’ jitters predominate

Yet again investors are dependent on utterances from the US president for clues as to whether this session’s risk-on sentiment will last more than a few hours. Already he has hinted at a move towards conciliation rather than conflict with China on trade, and now the survival of a putative deal to end the government shutdown depends on how the White House views it. While it doesn’t entirely ‘build the wall’, it does make a start, and the White House is unlikely to seek to plunge hundreds of thousands of US employees into another shutdown that will see their paycheques come to a stop. Looking at the longer-term view, the recovery in risk assets over the past few days has shown that those who
fled markets during the short drop at the end of last week were probably overly-cautious. Yes, markets have surged since December, but the macro backdrop for the US is encouraging, and with fund managers apparently heavily overweight cash once again there appears to be plenty of fuel for more gains, at least over the longer-term.

UK-focused stocks have taken a knock this afternoon as Brexit fears resurface. Reports of the PM heading towards a ‘no deal’ have been sufficient to spook investors, and TUI’s warning about weakness comes at a time when markets are already worried about the resilience of the UK economy. ‘Holding our nerve’ appears to be the new approach to get a deal, but a great game of chicken seems to be an unpromising way to conduct global affairs.

Author

Chris Beauchamp

EUR/USD hits two-day highs near 1.1820

EUR/USD picks up pace and reaches two-day tops around 1.1820 at the end of the week. The pair’s move higher comes on the back of renewed weakness in the US Dollar amid growing talk that the Fed could deliver an interest rate cut as early as March. On the docket, the flash US Consumer Sentiment improves to 57.3 in February.

GBP/USD reclaims 1.3600 and above

GBP/USD reverses two straight days of losses, surpassing the key 1.3600 yardstick on Friday. Cable’s rebound comes as the Greenback slips away from two-week highs in response to some profit-taking mood and speculation of Fed rate cuts. In addition, hawkish comments from the BoE’s Pill are also collaborating with the quid’s improvement.

Gold climbs further, focus is back to 45,000

Gold regains upside traction and surpasses the $4,900 mark per troy ounce at the end of the week, shifting its attention to the critical $5,000 region. The move reflects a shift in risk sentiment, driving flows back towards traditional safe haven assets and supporting the yellow metal.

Crypto Today: Bitcoin, Ethereum, XRP rebound amid risk-off, $2.6 billion liquidation wave

Bitcoin edges up above $65,000 at the time of writing on Friday, as dust from the recent macro-triggered sell-off settles. The leading altcoin, Ethereum, hovers above $1,900, but resistance at $2,000 caps the upside. Meanwhile, Ripple has recorded the largest intraday jump among the three assets, up over 10% to $1.35.

Three scenarios for Japanese Yen ahead of snap election

The latest polls point to a dominant win for the ruling bloc at the upcoming Japanese snap election. The larger Sanae Takaichi’s mandate, the more investors fear faster implementation of tax cuts and spending plans.

XRP rally extends as modest ETF inflows support recovery

Ripple is accelerating its recovery, trading above $1.36 at the time of writing on Friday, as investors adjust their positions following a turbulent week in the broader crypto market. The remittance token is up over 21% from its intraday low of $1.12.