CFDs

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Equities See Strong Start as Draghi and Yellen Testify to their Respective Governments 0

Posted on July 14, 2014 by Frankie Lawson

This week offers plenty in terms of tier one economic data and some significant events, unfortunately though today is not one of those days.

Despite this, the day has got off to a good start, with European indices posting strong gains and US futures pointing to a similarly positive open.

The last week was pretty grim for the CFD markets as investors opted for a more risk averse approach.

This meant European stocks continuing their recent slide and those in the US faltering at some big psychological levels.

Today’s strong start ahead of a busy week may be a sign that the recent weakness is short-lived and more record highs are in store for the US.

Draghi Faces a Grilling from the European Parliament

As mentioned earlier, today is looking fairly quiet, with the only notable event to come being ECB President Mario Draghi’s speech on monetary policy in front of the Committee on Economic and Monetary Affairs of the European Parliament.

Given that the ECB has only recently announced a large scale monetary stimulus program, this speech is unlikely to offer much in terms of the proximity of future stimulus efforts and what form they’re likely to come in.

Draghi may be questioned heavily on the selection of stimulus measures that the ECB opted for, given that they have come in for quite a lot of criticism by market participants.

The consensus view has been that the ECB took the easy way out and many of the measures announced are going to have very little positive impact.

I can’t imagine this therefore having much of a market impact, but as always with comments from a major central bank, you cannot write it off.

Yellen’s Speech May Inspire the Next Correction

The first big day for the US comes tomorrow, with retail sales figures being released alongside manufacturing data.

More important though is likely to be Fed Chair Janet Yellen’s testimony on the semiannual monetary policy report before the Senate Banking Committee.

Until now the Fed has refused to adopt a more hawkish tone despite the significant improvement in economic performance in the second quarter but that can only go on for so long.

Eventually, I expect Yellen to hint at a first rate hike in the first quarter of next year and when she does, investors may well freak out.

That could well bring the end of these daily records being made and be the start of the next correction.

Ahead of the opening bell, the S&P is expected to open 7 points higher, the Dow 68 points higher and the NASDAQ 18 points higher.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

EUR/USD CFDs May be Set to Slide on Strong NFP and Dovish Draghi 0

Posted on July 03, 2014 by Frankie Lawson

A mixed start to the session from an economic data stand point has not taken the shine off risk appetite on Thursday.

In Europe, indices are trading as much as 0.6% higher, while in the US indices are expected to open around 0.1% higher.

Ahead of the opening bell, the S&P is expected to open 1 point higher, the Dow 21 points higher and the NASDAQ 4 points higher.

Will Strong Employment Data Raise Rate Hike Expectations?

A lot of this may be attributed to yesterday’s ADP figure, which smashed expectations with a 281,000 increase in June.

Of course, this is only viewed as an estimate of the official job creation figure, and a pretty poor one at that, but a beat of that magnitude will always raise expectations ahead of the non-farm payrolls release.

As a result, today’s strong start is not necessarily an ongoing reaction to the ADP figure but higher expectations ahead of the jobs report.

With that in mind, a reading in line with analysts’ forecasts of around 212,000 is no longer likely to be good enough for traders.

We need to see something around 250,000 or more in order to fall in line with what is now being priced in.

The next question is how the markets will react to the data.

Of course, a strong jobs report is good for the economy but that is not necessarily good for risk appetite.

When the rally in equity markets is being supported by lower interest rates, the threat of an earlier rate hike as a result of an economy that’s recovering at a faster rate is not going to be conducive with a continuation of that rally.

With that in mind, a figure in line with yesterday’s ADP number is likely to weigh on equity markets today, while US Treasury yields could rise and the US dollar strengthen.

Other aspects of the jobs report are also likely to be of interest, such as the unemployment rate, the participation rate and the average hours worked, due to the Fed’s commitment to base monetary policy decisions on a basket of indicators.

However, based on what we’ve seen in the past, the non-farm payrolls figure, along with revisions to previous releases, still carries the most weight.

Draghi to Try Talking Down the Euro

Another major event today is the ECB rate decision and press conference.

This is not because we’re expecting any further stimulus from the ECB because we’re not.

ECB President Mario Draghi has a tendency to create major swings in the market and always delivers plenty of volatility.

We may see a more dovish Draghi at the press conference today as I imagine the ECB will not be pleased with the strength still being seen in the euro despite all of the stimulus measures announced last month.

It’s no secret that a strong euro is not ideal for the Eurozone and Draghi has used the tactic of talking down the currency in the past.

With it still trading above $1.36 against the dollar, we may see this tactic used again in an attempt to force it through $1.35.

Aside from these two events , there’s also plenty of big economic releases coming from the US today including weekly jobless claims, services PMI, non-manufacturing PMI and trade balance.

Each of these has the potential to move the markets and as a result I expect to see a huge boost in volatility today.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Stock Market CFDs Slide as Kerry Attempts to Form a Coalition in Iraq 0

Posted on June 24, 2014 by Frankie Lawson

US markets are expected to open lower today, giving up some of yesterday’s gains which brought about yet another record high in the S&P 500.

The positive data released in the form of the manufacturing PMI and existing home sales figures yesterday have been counteracted somewhat by negative sentiment driven from Iraq developments as Secretary of State John Kerry offered a potential promise of action from the US military.

As a result, US futures point towards a negative open, with the S&P 500 -5.5, Dow -39 and NASDAQ -10 points.

The European session has already brought about significant volatility in the markets, with the second consecutive data point out of Germany in as many days.

Yesterday’s disappointing PMI release saw the manufacturing sector growth come under some pressure and today was an opportunity to gain a swift redemption with the release of the IFO business survey results.

However, yet again the story wasn’t rosy for the Eurozone’s biggest economy, with current and future expectations of business conditions falling sharply.

It was the forward expectations that suffered the most, falling from 106.2 to 104.8.

This points to increased anxiety regarding Russian ties coupled with weaknesses in major export sectors such as China.

Add to this the effects of a historically strong euro and it is clear that businesses and exporters in particular feel unsure of future economic conditions.

Mark Carney at Parliament

In the UK, the inflation report hearings have been taking place, with Mark Carney and his fellow MPC members facing a grilling from the government regarding last month’s report.

This was expected to be a somewhat hawkish affair given the recent statements from Carney regarding his view that there will be a rate hike earlier than many within the markets are currently factoring into their investment decisions.

However, he took a surprisingly dovish stance, following on from his outlook last month when he likened the UK to a team in the qualifying stages of the World Cup.

The sell-off in GBPUSD followed his insistence that he sees substantial ‘spare capacity’ and ‘slack’ in the economy; jargon which we have become accustomed to in recent months which is so difficult to accurately measure that the BoE today admitted that they may have previously calculated it incorrectly in the past.

Mark Carney did clarify why he made such hawkish statements earlier this month at the Mansion House speech where he saw rates rising earlier than many expected.

Those comments were a measured decision to bring the forex markets back into alignment in relation to expectations going forward, yet for the most part it seems Carney is as dovish as ever.

In doing so, Carney was accused of being ‘an unreliable boyfriend’ who has been blowing hot and cold on the issue of rates which makes it difficult for people to accurately predict when rates will rise.

Will the US Step Back into Iraq?

In the US session, the developments in Iraq continue to persist, with John Kerry spending his time trying to put together a coalition government that avoids the country splitting between the Sunni, Shi’ite and Kurdish factions.

The battle for the Baiji oil refinery has taken an unexpected twist, with government forces taking the strategically key facility back from ISIS forces.

For a rebel force with an estimated $2 billion of funds, ISIS are clearly driven to gain strength by any means possible, be it controlling oil flow or raiding bank vaults as they go.

Thus today’s announcement is certainly welcome and shows that the government forces still retain the will to fight back against the tide of the ISIS.

John Kerry’s comments lead me to believe that the US are likely to step in with a military role should we see a convincing coalition government put together.

This is expected to be addressed on 1 July and thus this could act as a timeline upon when we could see US forces move into the region.

US Consumer Confidence

Looking ahead, the main event of note is likely to be the CB consumer confidence survey released later today.

The importance of the consumer within US growth is undisputed, with 70% of GDP driven by consumer led spending.

This can come in many forms, yet the fact of the matter is that investment activity is influenced heavily by the individual’s confidence in factors such as their employment situation and current economic conditions.

Thus today’s release is likely to provide a leading indicator to both future spending data and ultimately growth within the US.

Recent trends have been relatively encouraging, rising from 78.1 to 83.0 over a 3 month timeframe.

Expectations point towards a further rise towards 83.5, which would represent the highest level since January 2014.

Whilst many may pay little attention to this, I see it as absolutely key to determining the future path of growth in the US.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

S&P 500 Hits Record Highs as Yellen Says All the Right Things About Interest Rates 0

Posted on June 19, 2014 by Frankie Lawson

A day after the S&P rallied to new record highs on Janet Yellens dovish comments, US indices are expected to open relatively flat, with the S&P seen unchanged, the Dow down 4 points and the NASDAQ up 3 points.

Mark Carney’s admission last week that interest rates in the UK could rise earlier than financial markets are currently expecting had prompted a lot of speculation about whether the Federal Reserve would drop similar hints in the coming months.

Not only did Yellen not hint at this, she explicitly stated that rates would remain low well after the end of quantitative easing, which is exactly what the markets wanted to hear.

The comments were so well received that traders even overlooked suggestions that the rate of tapering could increase in the coming months.

Clearly, we’ve all moved past quantitative easing now and are far more concerned with interest rates, both the timing of the first hike and the path for future increases.

When it comes to this, Yellen said all the right things.

Over in Europe, as in Asia overnight, traders are also responding positively to Yellen’s dovish tone.

Anything that ensures rates remain low for longer will always be welcomed by investors.

UK Retail Sales Disappoint

Even a disappointing retail sales report from the UK did nothing to knock the positive mood.

As expected, sales fell by 0.5% in May, while the year on year figure was much lower than expected at 3.9%.

The US session is looking a little quieter today, although there are a couple of economic releases that could have an impact on the markets.

The first is the weekly jobless claims figure, which is due to be released before the opening bell on Wall Street.

New claims are expected to have fallen to 314,000 last week from 317,000 the week before.

This is another strong figure and provides further evidence of the ongoing improvement in the labour market.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Sterling Rallies to Resistance as MPC Minutes Agree With Carney’s Hint at 2014 Rate Hike 0

Posted on June 18, 2014 by Frankie Lawson

We’re potentially seeing a little bit of caution from traders ahead of the opening bell on Wednesday, given the FOMC decision and press conference later which always has the potential to create big moves in the markets.

As it stands, the S&P is expected to open unchanged, the Dow down 4 points and the NASDAQ up 3 points.

It’s not necessarily the decision itself that has the potential to shake things up, with the Fed being quite clear in the past that it intends to continue to taper by $10 billion per month unless circumstances drastically change.

While this may be a little predictable, the same can never be said of the press conference, especially one that includes a new set of economic projections that could alter when the Fed expects to bring an end to its quantitative easing program and, more importantly, begins to raise interest rates.

Currently, the markets are pricing in the first rate hike around the middle of next year, with rates potentially hitting 1% by the end of the same year.

The strength of the recovery in the US in the second quarter, combined with yesterday’s jump in CPI inflation to above 2% in May, could prompt some of the more hawkish Fed officials to call for the first hike to come earlier than we’re expecting.

We’ve already seen similar comments from Mark Carney, Governor of the Bank of England, so it wouldn’t be too much of a surprise if the Fed was on the same page.

Aside from this, the rest of the day is looking pretty quiet, which is only likely to feed into the more cautious approach being seen already.

MPC Minutes Point to 2014 Rate Hike

Unsurprisingly this morning, the BoE minutes pointed to a potential rate hike before the end of the year.

This would have been quite a shock for the markets had it not been for Carney intentionally dropping a big hint last week during his speech at the annual Mansion House event.

Clearly, he was just trying to avoid any excessive FX market volatility following the release of the minutes this morning.

Sterling rallied strongly against the dollar immediately following the minutes, before running into resistance again around $1.70.

The pair is now trading back around the level it was at before the minutes were released, around 1.6940, so clearly Carney’s warning worked perfectly.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Crude Oil Spike on Iraq Conflict Could Derail Carney’s Rate Hike Comments 0

Posted on June 13, 2014 by Frankie Lawson

Yesterday’s spike in oil prices along with Mark Carney’s surprising hawkish comments at the annual Mansion House event appear to have condemned European indices to end the week on a negative note.

Meanwhile, US indices are expected to shrug this off much more easily, with the S&P seen opening unchanged, the Dow down 4 points and the NASDAQ up 2 points.

The bulk of the downside resulting from the oil spike was probably largely priced into US stocks yesterday, which would explain why they appear to be showing such resilience ahead of the open.

Oil Surges on Iraq Uncertainty

That said, it’s unlikely that crude oil prices have peaked quite yet, in fact there could be a significant amount of upside to come if previous episodes of disrupted supplies are anything to go by, so I expect there’ll be more suffering to come for stocks.

Given what we’re just recovering from, it would be outrageous to say this has come at the worst possible time, but it is certainly extremely inconvenient.

The recoveries in the UK and US are still fragile, while the Eurozone is only stagnating at best.

We could have really done without another oil price shock that could derail what recoveries we are seeing and extend what has already been one hell of a financial crisis.

With US President Obama not ruling anything out, we have to assume that the situation in Iraq is going to get worse before it gets better.

This will be disruptive to say the least, not just to the consumer who will see disposable income take yet another hit as they are forced to pay higher prices at the pump, but also to companies that rely on oil and gas.

Hence why these stocks could suffer a lot more in the coming weeks and months.

Has Iraq Negated Carney’s Rate Hike Comments?

This could potentially make the comments made by Bank of England Governor Carney a little irrelevant as I can’t imagine that the MPC would look to tighten monetary policy at a time when the economic recovery is under threat.

Clearly the markets don’t see it that way, which is understandable as it’s a little early to start pricing in such assumptions.

Carney’s warning that interest rates could rise earlier than financial markets are currently expecting came as a total surprise to traders, most of whom were not expecting the first hike until the first quarter of 2014 at the earliest.

Sterling rallied aggressively following the comments, just falling short of $1.70 against the dollar for the second time in a little over a month.

Unlike last time though, traders now have a reason to buy at these levels and force the pair through this major resistance.

I expect this will happen in the coming days, potentially following a brief correction given the scale of the rally since yesterday.

A break through $1.7042 would see the pair trading at levels not seen since October 2008, the period when sterling went from trading at more than $2 to the pound to $1.35 in the space of five months.

The end of the week is looking pretty quiet with the only notable economic release being the preliminary UoM consumer sentiment reading for June.

This is an important piece of data as it gives us key insight into consumer attitudes in the coming months.

The consumer is so important to the US economy that this cannot be ignored.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

CFD Market Volatility Expected to Surge on ECB Rate Decision and Draghi Press Conference 0

Posted on June 05, 2014 by Frankie Lawson

The last couple of weeks in the markets have been dull to say the least; volatility has been down and so have trading volumes.

This can be largely attributed to the uncertainty surrounding the ECB decision and as a result, I expect this to change dramatically today.

Traders and commentators alike have spent the last month trying to deduce exactly what ECB President Mario Draghi meant last month when he claimed the central bank is ‘comfortable’ taking action in June.

Again, this came with the usual caveat being that he wanted to wait for the ECBs new projections before making any rash decisions and if we see nothing from the ECB today, he will fall back on this as the reason for holding off once again.

It baffles me that investors have once again taken the bait from Draghi and I expect them to be disappointed all over again.

That said, Draghi is the master of doing nothing while at the same time convincing investors that something big is around the corner.

While we may see big disappointment after the decision, I am confident that Draghi will once again talk himself out of it 45 minutes later and people will quickly begin talking about the next meeting as the point at which the ECB will come out firing.

What Will the ECB Do Today?

That’s not to say the ECB will do nothing today.

I think that would be a huge mistake and not even the ECB is dumb enough to make that one after creating all of this hype.

I believe we’ll see a token effort to appease the CFD markets in the form of a small refi rate cut, of 15 basis points, potentially partnered with a new initiative to boost lending to small and medium sized businesses, similar to the Funding for Lending scheme that the Bank of England introduced in the UK.

I believe the markets have priced in more, with many suggesting we’ll see negative deposit rates, but I will be very surprised if this happens.

The ECB doesn’t exactly have a history of delivering until it absolutely must.

There’s plenty more to focus on today, but none of these will have anywhere near the impact of the ECB decision and press conference on the markets.

The Bank of England decision will be a non-event as the central bank is under no pressure to change policy at the moment.

In the US, we have weekly jobless claims data being released, which is seen rising to 310,000 following another very strong figure last week.

The labour market is looking much better in the US at the moment and this only provides further evidence of that.

Ahead of the opening bell on Wall Street, the S&P is seen opening unchanged, the Dow 3 points lower and the NASDAQ 2 points lower.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

Sterling Spikes as Retail Sales Surge and MPC Step Closer to Rate Hike 0

Posted on May 21, 2014 by Frankie Lawson

A strong UK retail sales report and a slight hawkish tone to the BoE minutes has prompted a spike in sterling this morning.

Despite this, the FTSE responded less positively and is currently the only major European index to be trading in the red.

While the members of the MPC voted unanimously in favour of leaving interest rates and asset purchases unchanged, at 0.5% and £375 billion, respectively, the minutes showed that there is less agreement on the course for future interest rates, with some appearing to favour raising rates earlier and then more gradually after.

Until now, the first rate hike was not expected until the second quarter of next year, or late in the first quarter at the earliest.

This has cast serious doubt over whether the MPC will wait that long, especially following yesterday’s inflation reading which showed the rate rising to 1.8%, while the core number was in line with the central bank’s target of 2%.

While this doesn’t add pressure to the MPC to hike rates quite yet, as the economy improves and wages rise, so will inflation.

A lower rate, which is appeared to be where they we were headed, would have bought the MPC more time.

UK Retail Sales Smash Expectations

Offsetting the downbeat note from the BoE minutes was the retail sales number which smashed expectations of a 0.5% rise, hitting 1.3% in April.

This came alongside an upward revision to the March reading, making the beat all the more impressive.

The core retail sales numbers were equally impressive, particularly the year on year figure, which showed a rise of 7.7%.

What a difference a year can make.

A year ago we’d just avoided a triple dip recession, now unemployment has fallen significantly, consumers are spending more and the central bank is talking about rate hikes rather than more quantitative easing.

FOMC Minutes and Fed Speeches

Central banks will remain the focus as we move into the US session, with the minutes from the last FOMC meeting being released and three Fed officials scheduled to speak, including Chairwoman Janet Yellen.

The minutes can arguably be viewed as the less important of these today as a lot of data has been released since the meeting, including the all important April jobs report which showed 288,000 jobs being added and unemployment falling to 6.3%.

Of course, we should never make too many assumptions when it comes to FOMC minutes as they always have the potential to surprise, and have many times in the past, but given the statement that was released and expectations for monetary policy in the foreseeable future, I don’t expect much from the minutes.

The speeches on the other hand can offer the latest views of the officials and we can get much more insight into some of the issues facing the Fed.

A great example of this was Charles Plossers comments on Tuesday, when he spoke of the potential banana skin facing the US recovery with the Fed potentially being forced to raise rates earlier than it would want to in order to stop inflation getting too high.

While these particular comments didn’t have too big an impact on the markets due to Plossers known hawkish stance, should something similar come from a more dovish official, including Yellen herself, it could cause more of a stir in the markets.

Ahead of the opening bell on Wall Street, the S&P is expected to be 3 points higher, the Dow 24 points higher and the Nasdaq 5 points higher.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

EUR/USD Struggles After Improving Employment Data on Both Sides of the Pond 0

Posted on May 08, 2014 by Frankie Lawson

A fairly sparse week for the euro left it a quarter of a cent lower against sterling and half a cent higher against the US dollar.

The two most important sets of Eurozone economic data related to consumer prices and jobs.

Both could have set the euro in motion but neither did.

The rate of unemployment in the Eurozone was a touch lower than expected but at 11.8% was still too high for comfort.

Inflation accelerated from 0.5% to 0.7%.

The figure was slightly less than the 0.8% analysts had predicted and investors were not sure what to make of it.

They decided it was a step in the right direction towards the European Central Bank’s 2% target and that it would be high enough to avoid forcing the ECB’s Governing Council into quantitative easing action at this Thursday’s meeting.

US Dollar Sees Mixed Data

With a classic mix of good news and bad news the dollar had a difficult week that left it a full cent lower against sterling.

The good news came with Friday’s employment report.

Including upward revisions to previous months the Non-Farm Payrolls numbers showed 114k more people in work than investors had expected and the unemployment rate fell from 6.7% to 6.3%.

The bad news was Wednesday’s gross domestic product data.

America’s economy expanded by an annualised 0.1% in the first quarter, which translates into zero growth quarter-on-quarter.

When the Federal Reserve said the following day that it would keep interest rates close to zero ‘for some time’ investors came to the conclusion that there was no point in holding their breath in anticipation of a rate increase.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.

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European Indices Remain Under Pressure on Multitude of Negative Concerns 0

Posted on April 08, 2014 by Frankie Lawson

European indices are under pressure again on Tuesday, while US futures are currently treading water with the S&P down 2 points, the Dow down 13 points and the NASDAQ down 1 point.

There’s a clear lack of appetite for risk among traders at the moment and there’s plenty of things you could blame this on.

It could be the underwhelming data from the US, the Fed’s ongoing tapering, the flare up in Donetsk, the slowdown in China, the overvaluation of certain parts of the stock market or the low expectations as we head into another corporate earnings season.

To be fair, any of these would be a legitimate reason for traders to be a little risk averse.

The problem we have on top of this is that there’s very little to be positive about.

We had a whole host of economic data and announcements last week that could have given investors a reason to be more optimistic but there was nothing that blew us away.

The US jobs report on Friday showed a good number of jobs created in March but coming off the back of three poor months, it needed to be much better.

Stocks Await Alcoa Results

The European Central Bank could have been the catalyst that spurred the next push higher in stocks, but once again the central bank opted to hold off, despite inflation now running at 0.5%.

Instead, all we now have to look forward to is a mediocre earnings season for US shares and hopefully a gradual improvement in the economic outlook.

Alcoa gets earnings season underway today, reporting its first quarter earnings after the opening bell.

The aluminium giant, formerly a constituent of the Dow 30, may no longer be viewed as a bellwether for the stock market or the economy, it is the first major company that reports earnings and people still monitor this for an indication of how the earnings season is shaping up.

This week is looking pretty quiet from an economic data perspective, with today offering very little that would ordinarily have much impact on the markets.

Sterling Rallies on Manufacturing and Production Figures

The only notable release left today is the UK NIESR GDP estimate for the previous three months, which on this occasion is the first quarter of the year.

This is therefore the first estimate we’ll get of GDP growth in the quarter so can have a greater market impact.

As long as the number is roughly in line with that of the last six months, 0.7-0.8%, I think traders will be fairly pleased.

Anything above could lift expectations ahead of the first official release.

The data released already this morning has actually be quite positive, although you can only really see that reflected in the pound, with the FTSE currently down 0.7%.

The pound on the other hand responded very positively to the manufacturing and industrial production figures, which were significantly better than expected on both a monthly and yearly basis.

Given that this industry was previously viewed as a weak point for the UK, with the country overly reliant on its services industry, this is very encouraging.

The Bank of Japan meeting overnight was something of a non-event, with the central bank holding off on announcing an increase to its quantitative easing program.

There had been suggestions that the BoJ could act in anticipation of an economic slowdown in response to last week’s sales tax hike, but that never materialised.

Instead the tone of the press conference after suggested that the central bank will wait until the third quarter before acting, which would give them a chance to see what impact the tax has on the data and whether there’s a risk of the country falling into recession, as it did the last time the tax was raised.

 
CFDs, margined forex and financial spread trading are leveraged products. They carry a high level of risk to your fund. It is possible to lose more than your initial capital outlay with these products and they may not be suitable for all investors, do ensure that you fully understand the risks involved, seek independent financial advice if necessary.

Content by Alpari. This content should not be construed in any circumstances as a recommendation or solicitation of any offer to buy or recommendation or offer to sell any security or other financial instrument.



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