Oil lower as US stocks build

Andrew Hall , PhillipCapitalUK
18/Oct/2018 08:30

Oil prices trade lower this morning continuing their bearish trend after a sharp fall overnight due to a jump in US stockpiles and ongoing geopolitical tensions over the disappearance of the prominent Saudi journalist. US crude stocks rose 6.49 million against a forecast reduction of -0.281 million, in what is now the fourth straight weekly build. WTI tumbled to its lowest level in a month to trade at $69.61 per barrel, whilst Brent has not fared much better trading down at $79.34 per barrel.


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Markets await Brexit breakthrough

Andrew Hall , PhillipCapitalUK
17/Oct/2018 08:04

Stronger than expected average earnings data yesterday saw the pound strengthen, trading up against both the dollar and euro. The market seems to holding its breath this morning with regards to Brexit with negations now at the 11th hour, a deal and both yields and the pound should rise as the economy will continue to stutter along with some renewed confidence, however, a no deal, and it’s into the unknown. Mrs May is off to Brussels today for the leaders' summit; is this what they have been waiting for, show their leadership qualities and deliver a deal out of the blue or will the stalemate continue into the weeks ahead?


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Tags:   UK EU Brexit May GBP.

Asian shares inch higher amid heightened geopolitical tensions

Andrew Hall , PhillipCapitalUK
16/Oct/2018 08:43

Asian shares edged higher on Tuesday taking respite after a week of heavy losses, the greenback along with treasury yields inched higher, whilst the Yen lost ground. Traders continue to contend with the unrelenting US-China trade spat and heightened geopolitical tensions between Saudi Arabia and the West following the disappearance of a prominent journalist, developments which continue to sap market sentiment.
The MSCI's broadest index of Asia-Pacific shares outside of Japan traded up +0.25% after hitting a 19-month low on Thursday. Elsewhere we saw Hong Kong’s Hang Sang index drop -0.52%, with sharp falls in construction, whist over in Australia the ASX200 traded up +0.56% with most sectors trading higher. FTSE China A50 Futures rose this morning, recovering from the previous day selloff. However, this boost is likely temporary, as the possibility of additional US tariffs remains high. Should the US implement another wave of tariffs, China’s economic growth would inevitably slow despite addition stimulus from the Chinese government. This is evidenced from recent manufacturing PMI numbers with China’s factory orders having slowed down since the trade spat.


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N. Ireland border remains the elephant in the room

Andrew Hall , PhillipCapitalUK
15/Oct/2018 09:43

This morning we come in to news that the N. Ireland border remains the elephant in the Brexit negotiating room, with talks yesterday breaking up without agreement, ahead of Wednesday’s EU leaders’ summit. The PM is mindful of the growing unrest within her government as rumours of more ministerial resignations over the subject abound, causing her to hold a harder line than Europe would have likedr. The absence of an agreement with the Irish border issue remaining a real sticking point is seeing sterling trade lower this morning with the euro trading +0.29% up against the pound - the prospect of no-deal should see further yield easing.


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Italy and EU remain at loggerheads

Andrew Hall , PhillipCapitalUK
12/Oct/2018 08:58

The spat between Italy and the EU over Italy's budget plans rages on, with the 15th October deadline closing in. Italy’s 2019 budget plan will be delivered to the European Commission before the said deadline, and the European Commission will react accordingly. At present, the outcome is unlikely to be positive, as the Italian Parliament voted in favour of a higher 2019 target deficit, despite previous criticism by the EU. Markets have remained unsettled, as Italy's budget woes would result in another debt crisis, due to its proposed budget deficit being three times the forecast of the previous administration. In addition, the ECB minutes released last night also suggest concerns about the slowing growth in Europe. Hence, we expect more downside pressure on the EUR, especially if a confrontation between the EU and Italy breaks out over the budget issues, resulting in Italy's credit ratings being downgraded.


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Tags:   UK EU Budget ECB Euro.

Global sell-off to hit European stocks

Andrew Hall , PhillipCapitalUK
11/Oct/2018 08:47

Asian shares slumped on Thursday following their US counterparts with Wall Street suffering its worst rout in eight months - the dollar declined against all major peers, whilst the ‘safe-haven’ Yen saw gains up +0.06% against the dollar. The sharp sell-off in equities was triggered on heightening concerns on how far treasury yields will rise after 10-year treasury yields hit their highest levels since 2011. The NASDAQ recorded its worst day for seven years down -4.08%, whilst the Dow Jones and S&P 500 did not fare much better sinking -3.15% and -3.29% respectively.


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UK GDP and Manufacturing Data Ahead

Andrew Hall , PhillipCapitalUK
10/Oct/2018 08:49

We get a raft of August data this morning for the UK - manufacturing and industrial production, forecast at +0.1% MoM +1.1% YoY and +0.1% MoM +1.0% YoY respectively, along with construction output, which is expected to come in at -0.5% MoM +1.2% YoY. The monthly GDP figure will draw most attention though and it is thought that there will be a slowing from +0.3% in July to +0.1%, however, we feel there is an upside risk here as people were heading out enjoying the good weather. The 3M/3M growth rate is expected to hold steady at +0.6%...one to watch.
Bank of England chief economist and MPC member Andy Haldane will also be speaking today at 10.10am (BST).


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Salvini calls EU leaders “Enemies of Europe”

Andrew Hall , PhillipCapitalUK
09/Oct/2018 09:00

Italian issues resurfaced yesterday, leading to the deputy PM, Matteo Salvini saying that the unelected Jean-Claude Juncker, President of the European Commission and fellow bureaucrats are the “enemies of Europe” in response to more criticism and warnings over the country’s budget. Safety assets, including gilts, drew flows as Italian yields rose once again with Italy’s 10-year yield rising to its highest level in four and a half years.


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Comments fuel Brexit optimism

Andrew Hall , PhillipCapitalUK
08/Oct/2018 09:04

The US-inspired rise in yields continued on Friday, although it was signs of compromise in Brexit negotiations that brought firmness back late on, as initial gains had been given back throughout the day. Comments that progress had been made over the week on the talks gave rise to optimism that a deal can be achieved over the next few weeks, a message repeated over the weekend helping propel the pound up to recent higher levels – the pound trades up against the Euro at 1.1378. Nevertheless, there is still no detail on the major elephant in the room however, the Northern Ireland border. We are told there could be some news on that this week…watch this space.


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US Non-farm payroll in focus

Andrew Hall , PhillipCapitalUK
05/Oct/2018 08:41

Focus will shift to the US with investors keeping a close eye on the US jobs report for September with the unemployment rate set to fall to an 18-year low of 3.8%. Headline Non-farm payrolls are forecast to show 185K jobs added for the month of September, retreating somewhat from August’s figure of 201K. Jerome Powell, the Federal Reserve Chairman said on Tuesday that the economy’s outlook was “remarkably positive” and he thought it was on the verge of a “historically rare” era of ultra-low unemployment and tame inflation. The U.S. central bank raised interest rates last week a quarter of a percentage point to 2.25% and removed the text in its post-meeting statement to monetary policy remaining “accommodative.”


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Oil prices surge ahead of US sanctions

Andrew Hall , PhillipCapitalUK
04/Oct/2018 08:43

Crude oil prices surged as markets braced for the impact of US sanctions on the global crude oil supply chain. Global oil futures have surged by 20% since August 2018 as markets look towards tighter global supplies amidst a widely expected Iranian shortfall, with sanctions on the nation due to take effect in November. Industry observers are cautious on OPEC+ ability to match Iran's outage with increased output levels. Global oil demand growth has shown to be resilient despite trade protectionism policies by the world's largest economies. The US Energy information Administration (EIA) has reported for a huge jump of 7.9 million barrels in crude oil inventories last week. US gasoline inventories decreased modestly by 0.45 million barrels whilst US crude oil production levels remained flat at 11.1 million.


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Tags:   WTI US EIA Iran OPEC.

USD Continues to Soar

Camilla Boldracchi, PhillipCapitalUK
03/Oct/2018 08:41

Click here The Dollar strength is still apparent, as it continues to strengthen against most other G-10 currencies. After the Fed rate hike last month and its FOMC statement, fundamentals for the dollar have continued to rise. Last night, Fed Chairman Jerome Powell's speech also emphasized that the Fed would continue with gradual rate hikes into 2019. Tonight, US's non-manufacturing PMI numbers will be release. Should it continue to show strong expansion despite the ongoing tariffs, it would support Fed's view that the US economy is on a stable growth path. This will in turn give further strength to the USD.


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Tags:   FOMC G-10 PMI USD

Italy and the EU Clash Over Budget Plans

Camilla Boldracchi , PhillipCapitalUK
02/Oct/2018 08:17

Italy's deficit-boosting budget plan continued to weigh on the EUR. Markets have been worried that Italy’s recent budget could result in the next "Greece crisis". This is because Italy’s plan to borrow billions of extra euros to fund spending pledges could tip Italy into a sovereign debt crisis, in turn spurring another crisis in the Eurozone. It is to be noted that the Italian economy is much bigger than that of Greece.


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Canada and US reach trade agreement

Andrew Hall , PhillipCapitalUK
01/Oct/2018 12:31

The US and Canada have at the eleventh-hour reached common ground in the updated North American Free Trade Agreement (NAFTA), following Mexico’s lead earlier this year and salvaging the $1.2 trillion open-trade zone. Prime Minister Justin Trudeau declared it “a good day for Canada”, with Loonie soaring to its highest levels since May on the news trading up +0.53% against the dollar. A joint statement from the two nations said the now termed United States-Mexico-Canada Agreement (USMCA) would “result in freer markets, fairer trade and robust economic growth in our region”.


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Conservative Party Conference 2018

Andrew Hall , PhillipCapitalUK
01/Oct/2018 08:36

On the home front the Conservative Party conference kicks off in earnest today with Philip Hammond delivering his speech against a backdrop of squabbling among the major members of the party over Brexit. Britain will leave the European Union “in fact, not just in name”, Brexit minister Dominic Raab will say on Monday, warning that London’s “willingness to compromise is not without limits” and leaving without a deal is very much an option. Hammond seconded stating that the United Kingdom has the fiscal capacity to cope with a no-deal Brexit, no doubt adding to the disillusion shrouding May’s Chequers plan.


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The U.S. economy rallies

Camilla Boldracchi , PhillipCapitalUK
28/Sep/2018 09:02

Click here The final US GDP results confirmed that the US economy grew at its fastest pace in nearly four years. This reinforces the Fed’s upbeat view of the US economy. It also backs the Fed’s signal for a steady course of rate hikes well into 2019. Market interest is seemingly returning to the USD, as investors digest the hawkish FOMC statement and the Fed putting an end to its "accommodative" policy era. Hence, with the Fed still more hawkish than other central banks in terms of monetary policy, we foresee that the dollar will strengthen further.


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Tags:   GDP USA FOMC

Super Mario adds on EUR selling pressure

Camilla Boldracchi , PhillipCapitalUK
28/Sep/2018 08:58

= The EUR pulled back as the euphoria from ECB president Mario Draghi’s previous comments of a vigorous pickup in euro zone inflation fizzles. Last night, there was also no further explanation on these comments during his speech. In addition, on the backdrop of the re-emergence of the Italian budget turmoil, the EUR faced strong selling pressure yesterday. Reports stating that a key meeting on Italy’s 2019 fiscal targets being delayed, coupled with the Finance Chief threatening to resign, caused market fear. Though a conclusion was eventually reached, it was above the target initially set by the EU.


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Tags:   Mario Inflation Italy

Trump: OPEC should moderate oil prices

Camilla Boldracchi, PhillipCapitalUK
27/Sep/2018 14:30

Crude oil futures showed for positive trades as markets remain cautious on the potential of a supply squeeze amidst looming US sanctions on Iranian petroleum products. Heightened geopolitical risks in the Middle East and OPEC+ reluctance to affirm for immediate supply increments have led increasing bets on tighter oil markets. President Trump has called out OPEC+ to moderate oil prices repeatedly in lieu of an upcoming mid-term congressional election in November. Over in the US, API reported for a build of 2.9 million barrels in crude oil inventories while gasoline stockpiles increased modestly to 0.95 million barrels.


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Tags:   OPEC+ Oil Trump

Fed hikes in the horizon

Camilla Boldracchi, PhillipCapitalUK
27/Sep/2018 14:19

Click here The dollar remains largely steady against most other G-10 currencies, while US treasury yields were kept above 3%, as investors look towards the FOMC state due for release later tonight. A rate hike is more or less certain, with the CME FedWatch indicating a 95.0% probability of a 25 basis point hike. EURUSD interest rate futures are implying another two more rate hikes by the Fed this year. Peeking investor’s interest will be the press conference after the meeting. Should there be comments on the impact of escalating trade tensions, or should Fed Chairman Powell appear less hawkish, it could dampen markets.


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Tags:   Fed Hike EURUSD

Brexit negotiations continue

Camilla Boldracchi , PhillipCapitalUK
26/Sep/2018 08:26

Click here Pessimism in the ongoing Brexit situation continues to weigh on the GBP. UK Prime Minister Theresa May continues to face domestic pressure over her Brexit plan. Aside from members of her own party seeking alternative plans, the main opposition party, has also vowed to reject any deal with the EU that fails to meets its tests. Meanwhile, May's persistence on her "Chequers" plan could also see Brexit negotiations hitting a prolonged standstill.


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