Little to Xcite but the price

Little to Xcite but the price

Mike van Dulken and Henry Croft at Accendo Markets commented to clients this morning:

FTSE 100 Index called to open -35pts at 7375, back below 7400 and having broken below 5-day rising support. This follows yet another rejection at 7435 that keeps the index in its 7300-7440 range of the last month. Bulls need a break above 7390 to revive confidence. Bears require a breach of Friday’s 7360 lows. Bullish 7390, Bearish 7360

Calls for a negative European open are despite another S&P record high as US financials embrace higher bond yields and a revival of hopes about tax reform. This has resulted in a largely positive session in Asia overnight, but with waning bullish momentum. The UK FTSE remains hindered by Sterling strength (12-month high) in the wake of strong UK inflation figures, as well as a US Dollar Index retreat to yesterday’s lows.

Japan’s Nikkei outperforms thanks to further Yen weakening (vs USD) following weak PPI data, a steady oil price and financial sector strength. Australia’s ASX is break-even despite gains financials and Miners, the latter in spite of metals easing, perhaps boosted by Gold ticking up off its lows.

In FTSE news: easyJet launches ‘Worldwide by easyJet’ to simplify connections with partner airlines. Halfords appoints Graham Stapleton as CEO from Dixons Carphone’s software business. Balfour Beatty sells Blackpool Airport to Council for £4.3m.

Dunelm sales +2.3% (excl Worldstores; -0.5% like-for-like) miss forecasts, in challenging and subdued Homewares & Furniture markets. Just Group adjusted operating profit +39% in H1 2017, new business profit more than doubled, dividend increased. Reuters says Shell is to seek exit from Majnoon Oil Field.

US equity markets closed higher once again yesterday, albeit by less than Monday, as Financials benefited from higher Treasury yields, while US Treasury Secretary Mnuchin divulged more details on the Trump administration’s proposed tax reforms. This strength propelled the S&P500 to another fresh closing and intraday high, while Goldman Sachs offset McDonald’s losses to help the Dow Jones to within 30 points of its own all-time high. Despite what turned out to be a lacklustre Apple product release, the Tech-focused Nasdaq followed its peers higher.

Crude Oil prices are maintaining yesterday’s gains, supported by a bullish API inventory data release. While crude inventories rose, they increased by much less than expected, while the institute reported its largest ever gasoline draw. This has helped Brent and US benchmarks to maintain their 2-week uptrends, with the former holding onto gains above $54 while the latter traders above $48.

Gold has rallied from 1-month rising lows support, helped higher as the US dollar retreats from its highs, reducing the relative price of the precious metal. While the safe-haven asset has retreated from its overnight highs of $1335, it remains well above yesterday’s lows of $1323. Once again, the US dollar will play a significant role in dictating market sentiment throughout the day.

In focus today will be UK Unemployment and Wage data (9:30am). With the former expected to hold steady at a 42-year low, the spotlight will likely fall on Average Weekly Earnings. Following yesterday’s much hotter than expected inflation prints, the Bank of England will be hoping for a reciprocal surprise from Wages too. A disappointment, however, will add yet another level of complexity to their current interest rate quandary, with policymakers hesitant to increase rates which consumers  are subject to an extended pinch on their pockets (Inflation > Wage growth).

Elsewhere, Eurozone Industrial Production (10am) is seen returning to growth in July following June’s 2017 low, propelling the annual figure towards May’s 2017 high, while US PPI this afternoon (1:30pm) follows a similar pattern, growing once more in August while the annual rate of growth is expected at a 2017 high.

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