|

Risk-on remains, as stock surge sustains

The stock market rally has continued apace today, with the FTSE continuing its ascent, helped by rising oil prices.

•       FTSE rallies, helped by financial and energy firms
•       Rosengren raises chance of December hike
•       Did todays UK inflation reading open a window for BoE?

Stock markets rose once more today, as hopes of a high growth period based on substantial fiscal stimulus continued to stoke the embers of last week’s US election. UK stocks once more saw financials outperform on the prospect of a world with higher rates and higher growth. However, interestingly, we have seen energy stocks grab some respite today, as crude prices rose in the wake of a fresh charge from OPEC to find a means to ensure the output cut comes to fruition.

The US dollar was given yet another leg higher this afternoon, after Boston Fed President Eric Rosengren encouraged recent speculation that the Fed will raise rates in December. A combination of near full employment and rising inflation provided Rosengren with a view that absent of any significant negative economic news over the next month, a rate hike in December seems plausible. With markets currently factoring in a 94% chance of a December, there is no doubt that there is a strong conviction that the Fed will finally move. Given Trumps criticism of the Feds ultra-easy policy stance in recent years, it would be no surprise to see a shift to tighter policy going forward.

UK inflation took a surprising dive in October, with CPI falling across the board against expectations. Notably, we have seen core CPI pull back considerably from the 2% target, with the current 1.2% level providing room for manoeuvre at the BoE in the coming months. Amid a global reflation trend, the weak pound is expected to raise inflation risks for the UK, thus lessening the degree of easing the BoE are able to enact. Today’s appearance from Carney saw the governor speculate on the notion that we should see the mandate revised regularly, providing a hint that he would be willing to ease further if it wasn’t for the 2% inflation target.

Author

Joshua Mahony MSTA

Joshua Mahony MSTA

Scope Markets

Joshua Mahony is Chief Markets Analyst at Scope Markets. Joshua has a particular focus on macro-economics and technical analysis, built up over his 11 years of experience as a market analyst across three brokers.

More from Joshua Mahony MSTA
Share:

Editor's Picks

EUR/USD stays defensive below 1.1900 as USD recovers

EUR/USD trades in negative territory for the third consecutive day, below 1.1900 in the European session on Thursday. A modest rebound in the US Dollar is weighing on the pair, despite an upbeat market mood. Traders keep an eye on the US weekly Initial Jobless Claims data for further trading impetus. 

GBP/USD holds above 1.3600 after UK data dump

\GBP/USD moves little while holding above 1.3600 in the European session on Thursday, following the release of the UK Q4 preliminary GDP, which showed a 0.1% growth against a 0.2% increase expected. The UK industrial sector activity deteriorated in Decembert, keeping the downward pressure intact on the Pound Sterling. 

Gold sticks to modest intraday losses as reduced March Fed rate cut bets underpin USD

Gold languishes near the lower end of its daily range heading into the European session on Thursday. The precious metal, however, lacks follow-through selling amid mixed cues and currently trades above the $5,050 level, well within striking distance of a nearly two-week low touched the previous day.

Cardano eyes short-term rebound as derivatives sentiment improves

Cardano (ADA) is trading at $0.257 at the time of writing on Thursday, after slipping more than 4% so far this week. Derivatives sentiment improves as ADA’s funding rates turn positive alongside rising long bets among traders.

The market trades the path not the past

The payroll number did not just beat. It reset the tone. 130,000 vs. 65,000 expected, with a 35,000 whisper. 79 of 80 economists leaning the wrong way. Unemployment and underemployment are edging lower. For all the statistical fog around birth-death adjustments and seasonal quirks, the core message was unmistakable. The labour market is not cracking.

Sonic Labs’ vertical integration fuels recovery in S token

Sonic, previously Fantom (FTM), is extending its recovery trade at $0.048 at the time of writing, after rebounding by over 12% the previous day. The recovery thesis’ strengths lie in the optimism surrounding Sonic Labs’ Wednesday announcement to shift to a vertically integrated model, aimed at boosting S token utility.