CFDs

Archive for the ‘CFDS – Forex Trading’


Fed Rate Hike Concerns Encourage Caution within the Stock Markets 0

Posted on October 30, 2014 by Frankie Lawson

While the Fed ending its quantitative easing program may be yesterday’s news, the prospect of a rate hike in the US is continuing to weigh on sentiment ahead of the open on Thursday.

Given some of the comments we’ve had from certain Fed officials recently, I think a lot of people were expecting the Fed’s statement to be much more dovish than it was and therefore, the Fed took us somewhat by surprise.

Of course, the Fed maintained its commitment to keep rates low for a considerable amount of time but this is still a very subjective period.

When accompanied by comments referring to the strength of the economy, the improved economic outlook, an improving labour market and no inflation concerns, it’s only natural that investors bring forward their rate hike expectations to the near end of the range.

I’d say most people were expecting the first hike to come between June and September and I imagine many of those will now be saying June, at the latest.

In reality, this is only a marginal adjustment and therefore I expect the reaction to it to be temporary.

If we see some strong US data and earnings today, for example, I wouldn’t be surprised to see the US stocks reverse their losses and turn back into the green.

Will Eurozone Data Answer Deflation Threat?

The Eurozone data has not quite done the job this morning, despite German unemployment falling by 22,000 and all the confidence surveys improving in October.

This is a little surprising but I guess German unemployment is not a real concern in the Eurozone right now and the improvement in the surveys shouldn’t be too shocking given the improvement we saw in the PMI readings last week.

From a German and Eurozone perspective, of greater importance will be the preliminary inflation readings for October.

The deflation threat in the Eurozone is a massive concern right now and while it may be understandable to be seeing this in some of the peripheral countries because of the austerity, the fact that we’re seeing low inflation in Germany suggests there’s something to be concerned about.

If we see a pickup in inflation in Germany in the coming months, it may allay some fears of deflation in the region.

This should be helped by the weakness in the euro, which is now down around 10% since May.

US Growth and Jobless Claims

The first reading of US GDP for the third quarter will be released ahead of the US open.

Everyone has been aware that it has been a good quarter for the country as it continues its strong economic recovery and the data today is expected to show this.

The country is expected to have grown 3% on an annualised basis in the three months to the end of September, which is very impressive growth and the kind only the UK and China can also boast, with the Eurozone stagnating and many others slowing.

Shortly after we’ll get the latest jobless claims reading, which is expected to be in line with last week’s reading of 283,000.

These figures have been getting better and better recently, falling to a 14 and a half year low a couple of weeks, while continuing claims at their lowest since the financial crisis began.

The S&P is expected to open 14 points lower, the Dow 58 points lower and the NASDAQ 35 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.

Article by Craig Erlam, Market Analyst, 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.

FOMC Policy Decision Set to Pull the Plug on QE3 and Delay Rate Hike Expectations 0

Posted on October 29, 2014 by Frankie Lawson

US futures are treading water ahead of the opening bell on Wednesday, which will come as no surprise to many given that the FOMC is due to announce its latest policy decision later on in the day.

This also comes following a good showing on Tuesday, which was driven by a combination of a much better than expected consumer survey and a expectations that the first rate hike will come a little later than previously anticipated.

The survey, carried out by CNBC, showed that market participants now see the first rate hike in July, a month later than previously though.

This could continue to be pushed back if the inflation data continues in line with the current trend which would make it very difficult for the Fed to hike rates.

There are even some that are already talking about the potential for QE4 which displays a massive change in thinking from a couple of months ago when people were discussing the prospect of an earlier rate hike.

Fed Quantitative Easing to Come to an End

What most people do seem to agree on is the fact that the Fed will bring its third quantitative easing program to an end this month with its final $15 billion taper.

I would be very surprised to see anything different given that the rest of the tapering process has run so smoothly.

I would also be very surprised if the Fed significantly changes the language of the accompanying statement, which would include the remove of its commitment to keep rates low for a considerable amount of time.

Not only has the guide that Chair Janet Yellen laid on in relation to wage growth not really improved, but the inflation scenario is deteriorating both in the US and around the world.

It wouldn’t make any sense to deliver a more hawkish statement at this time.

There would also be no opportunity to answer any questions if they did opt to change the statement significantly or delay the end of QE as this meeting will not be followed by a press conference.

Given that the Fed will not want to contribute to more market drama if it can be avoided, I imagine any changes would be put off until December.

I also can’t see what the benefit of delaying the end of QE would be.

People only care about the first rate hike and the pace of increases thereafter.

No one cares about QE any more unless there’s going to be a brand new stimulus package, which at this point is extremely unlikely.

World Bank Confident China Can Operate at 7% Growth

The World Bank attempted to ease market concerns about the rate of growth in the Chinese economy today after it claimed that the country can afford to cut its 2015 growth target to 7% while maintaining a healthy labour market.

There have been fears that China is facing a few very tough years after growth slowed to 7.3%, its lowest rate since the start of 2009, in the third quarter.

However, based on the World Bank’s remarks, there is no risk to the Chinese economy at these levels and it can even afford to slow a little further before the risks begin to build.

Based on the muted reaction in the markets, it appears investors are not encouraged by this, potentially suggesting that they see much lower growth than 7% in the coming years.

The S&P is expected to open unchanged, the Dow up 8 points and the NASDAQ down 14 points.

 
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.

Article by Craig Erlam, Market Analyst, 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.

European Stocks See Caution as Reports Suggest 11 Banks Will Fail Stress Tests 0

Posted on October 22, 2014 by Frankie Lawson

It’s been a mixed start to the trading session in Europe as investors look to digest a raft of earnings, reports that 11 banks will fail stress tests this weekend and dovish Bank of England minutes.

While the general tone in the markets has been more positive this week, investors remain on edge particularly when it comes to the Eurozone.

Reports this morning suggested that 11 banks from six countries will fail the stress tests when the results are released this weekend.

The ECB has refused to comment on these reports, which will only add fuel to the fire and could spur more risk aversion towards the end of the week.

While the banking system is more secure than it was back in 2011, the contagion risk that caused so much concern throughout the Eurozone crisis could return if investors aren’t convinced by the results.

We’re already seeing these reports weighing on CFDs prices in Europe this morning, it will be much worse if the results are disappointing, especially if any big banks at the core fail.

Will the ECB Buy Corporate Bonds?

Potentially offsetting this were the reports yesterday that the ECB is planning to discuss purchasing corporate bonds on the secondary market in another attempt to improve liquidity in the Eurozone.

For me, this is just another sign that the ECB will do anything to avoid quantitative easing which has worked so well in other countries.

That said, from an investor standpoint, it is encouraging to see the ECB making efforts to increase credit availability and tackle one of the many problems in the region.

The ECB is clearly determined to expand its balance sheet back to the €3 trillion level it was at back in 2012 and that is encouraging.

It has been criticised for so long for doing nothing, it may not be doing QE still, but it’s certainly making a big effort.

MPC Stand Firm

The minutes from the October Bank of England MPC meeting were released this morning and while the voting remained unchanged, with only Martin Weale and Ian McCafferty voting in favour of a rate hike, there was clearly a more dovish tone to the committee.

They particularly highlighted the deterioration in the Eurozone economy, which the UK is very exposed to with it making up about half of its trade.

On top of this, inflation in the UK has fallen another 0.3% since the meeting to 1.2%, the lowest level in five years.

This can only make the first rate hike less likely and could even have an impact on the voting next month, swinging it more in favour of those wanting rates to remain at 0.5%.

US Inflation and Earnings

The focus during the US session today is likely to be on earnings and inflation, with the latest CPI data for September being released.

It should be noted that this is not the Fed’s preferred measure of inflation and should therefore only be seen as indicative of any change we could see in the core personal consumption expenditure price index.

That said, it is unlikely that any big change here, similar to what is being seen in the UK, wouldn’t be reflected in the core PCE number.

One thing that may weigh on the inflation reading is the appreciation of the dollar over the last few months.

On the earnings front, we’ll get results from 33 S&P 500 companies including Boeing, AT&T and GlaxoSmithKline.

Earnings season has been quite impressive so far and is probably partially responsible for the recovery in stock markets this week.

So far, 67% of companies have beaten earnings expectations, which is roughly in line with the average, while profit growth expectations have been revised higher for the third quarter.

The S&P is expected to open 1 point lower, the Dow 15 points lower and the NASDAQ 4 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.

Article by Craig Erlam, Market Analyst, 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 Indices Rebound as FOMC Holds Onto Dovish Rhetoric and Alcoa Leads the Way 0

Posted on October 09, 2014 by Frankie Lawson

We’re expecting another positive start to the trading session in the US on Thursday, following the strong gains made on Wednesday after the Fed maintained its dovish stance on interest rates.

There’s a lot of fear in the markets at the moment and it’s all centred around the Federal Reserve, when it will raise interest rates and the pace of hikes after the first one takes place.

That fear is leading to some irrational moves in the CFD markets which concerns me given that it’s occurring at these record high levels.

Investors are clearly quite uncomfortable with current valuations and are hitting the panic button at the first sign of trouble, for example on Tuesday after the IMF revised down its global growth forecasts.

‘Considerable Time’

The Fed is very aware of this which is why it opted to maintain its commitment to keep rates low for a considerable amount of time.

At some point this language will have to be removed and when it does, it could prompt a significant correction.

What we need now to calm the nerves is a very good earnings season, something that shows us that we don’t need Fed stimulus to justify current valuation, that companies are performing well and things are only going to get better.

Alcoa got things off to a great start on Wednesday evening but they are not considered the bellwether they once were.

What they did show though is that all of the cost cutting pain of recent years was not for nothing and the company is now in a great position going forward.

That is the message we need to get from the rest of earnings season and if we can see companies beating on both earnings and revenue expectations while keeping profit warnings to a minimum, it may be enough to ease investors’ concerns about interest rate hikes.

US Jobless Claims

Today is shaping up to be a fairly quiet day with not much due on the data side of things.

The only notable release is the weekly jobless claims number which is expected to rise slightly to 294,000.

This would mark a fourth consecutive week of sub 300,000 claims which would be the first time since the start of 2006.

Needless to say that says a lot about the progress made in the US over the last 12 months and further suggests that the economy no longer needs such an accommodative central bank.

We’ll also get the latest monetary policy update from the Bank of England before the open, although no change is expected in either interest rates or asset purchases.

The fact that the BoE doesn’t release a statement or follow up with a press conference, this tends to make it something of a non-event despite it having the potential to cause major ripples in the markets.

The S&P is currently seen opening 5 points higher, the Dow 27 points higher and the NASDAQ 13 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.

Article by Craig Erlam, Market Analyst, 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.

Falling German Industrial Production Hits Equities as Eurozone Growth Concerns Weigh 0

Posted on October 07, 2014 by Frankie Lawson

It’s been a fairly negative start to the trading day in Europe, with industrial production numbers in Germany in particular hitting investor sentiment.

Once again it’s the Eurozone that causing the biggest concerns after the latest data from Germany provided further evidence that the economy is struggling to recover from the summer lull.

A certain proportion of the blame for the downturn has been put on the Ukrainian crisis and what it did to trade relations between Russia and the Eurozone.

However, many people are starting to question just how much this can be blamed for the slowdown and whether it is in fact more to do with the fact that the economy just hasn’t recovered as much as we previously hoped.

The Eurozone economy is still extremely fragile and the low inflation environment is probably not helping matters.

If we do see an improvement later this year, I don’t expect it to be overly significant.

UK Q3 Growth Estimates

The UK figures were a little mixed this morning, with manufacturing production exceeding expectations in August while industrial production slightly missed.

The July numbers were revised higher though which put more of a positive spin on things.

Next up from the UK, we have the NIESR GDP estimate for the three months to September which could provide an accurate forecast of the official third quarter GDP figure that will be released in a couple of weeks.

For this reason, CFD traders are likely to watch this very closely.

Speeches from the Federal Reserve

As far as the US is concerned, it’s looking a little quiet on the economic data side of things.

We will hear from two members of the Federal Reserve which could provide some useful insight ahead of the minutes release tomorrow.

Until now, aside from having two dissenting voters, the Fed has shown no willingness to change its stance despite the ongoing improvement in the data.

It was speculated that they may remove the commitment to keep rates low for a ‘considerable period of time’ after the end of asset purchases (this month) at the last meeting but that never happened.

Maybe the minutes will tell us more about whether they intend to do that this month.

Ahead of the opening bell on Wall Street, the S&P is seen 8 points lower, the Dow 66 points lower and the NASDAQ 16 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.

Article by Craig Erlam, Market Analyst, 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 Markets Rally as Slumping Eurozone Inflation Piles Pressure on Draghi to Start QE 0

Posted on September 30, 2014 by Frankie Lawson

US markets are hoping for a positive start to the day, where weakened Eurozone CPI has put further pressure upon Mario Draghi to introduce yet further easing at the ECB.

The continuation of a worsening Eurozone is the polar opposite from the UK, where GDP pushed yet higher this morning.

In a day dominated by the European data releases, a theme of Eurozone weakness and UK strength provided a bullish theme to the markets.

As such, the US markets are expected to open lower, with the S&P 500 -7, DJIA -54 and NASDAQ -16 points.

Eurozone Inflation Falls to Lowest Level Since 2007

The euro came in for a bashing again this morning, as inflation pushed further to the downside, increasing the validity of calls for the introduction of a fully blown asset purchase scheme by the ECB.

Mario Draghi has been fighting against the plummeting rate of CPI, which has been falling since the beginning of 2012 when it peaked out at 3%.

Today’s fall to 0.3% was far from unexpected, however the continuation of this downward trend in prices makes for worrying reading.

The data only proves to the forex CFD markets that all the measures introduced so far have been completely ineffective at bringing about price stability or higher growth within the region.

Perhaps the most worrying thing about today’s release was the unexpected fall in core CPI from 0.9% to 0.7%, which underlined that the weakness in price growth is not solely an issue which can be explained away by factors such as food and energy, which are largely unaffected by monetary policy decisions at the ECB.

Representing the lowest level seen since the financial crash of 2007, this core CPI reading is sure to worry Mario Draghi and could push forward the potential of a QE programme in the near future.

Today’s weak Eurozone CPI reading was also accompanied by a disappointing German unemployment change figure, which saw 13k more people in unemployment, representing the second consecutive month of increased unemployment in the German economy.

Overall this continued weakness in Germany, accompanied by an incessantly falling inflation rate means that Mario Draghi is being pushed into a corner to find the solution, and fast.

However, despite some calls for the introduction of a fully blown asset purchase scheme later this week, it is highly unlikely, with Thursday’s meeting likely to focus upon the intricacies of the ABS scheme that was announced last month.

US Consumer Confidence

US stocks will be looking forward to a somewhat calm day in the CFD markets from an economic standpoint, where the consumer confidence figure represents the only major release of note.

With an economy that is 70% driven by domestic consumption, confidence is a leading indicator of where spending is likely to be in the US for September.

Today is really the beginning of the week in a way, where we begin to start seeing really major market moving events come on a daily basis.

With this in mind, there is likely to be an element of risk aversion take hold given the likely volatility that could become a regular feature of the markets for the remainder of the week.

 
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.

US Momentum Dims After Strong Surge on Housing Data as Durable Goods Looks to Fall 0

Posted on September 25, 2014 by Frankie Lawson

US markets are looking a little less optimistic today, following a strong rebound to the upside off the back of yesterday’s impressive housing data.

The existence of major fundamental risks next week means that there is some caution ahead with many unsure of the direction that markets should be heading.

Dovish tones from ECB Governor Mario Draghi have set the European markets alight, yet it remains to be seen whether this can translate to the US indices.

US markets are expected to open lower, with the S&P 500 -2, DJIA -2 and NASDAQ -3 points.

Yesterday’s massive existing home sales figure provided a major boost to the markets, as it posted the joint highest level of sales since late 2008.

Whilst this caused the unwinding of much of the initial losses we have seen in the first half of this week, markets have regained their somewhat cautious approach today and appear to be looking at a moderately negative open.

The downturn in the housing sector has been indicative of this whole crisis since 2008 and for many, the feeling of a booming housing market is one which fills people with confidence that things are finally better in relation to their personal finances.

For this reason, it makes sense that figures such as these provide a major boost to confidence, yet it should be noted that given the disappointing new home sales number on Monday, the picture is still relatively murky and far from one sided.

Draghi Stands Ready for Unconventional Measures

The release of an interview from Mario Draghi in Lithuania today has caused somewhat of a stir within the markets, with the ECB Chief hammering home the notion that they stand ready to act with unconventional measures should need be.

For the most part I see this as a show to the CFD markets to keep the good feeling going whilst putting further downward pressure upon the euro.

I have no doubt that should we continue to see poor takeup from the TLTROs, along with negative movement in CPI and growth, then Draghi would consider a full asset purchase scheme.

However, with the implementation of an ABS purchase programme, I highly doubt that we are going to see anything at this or the next meeting from the ECB.

It is really a win-win situation for Draghi as positive dovish rhetoric can provide a strong indices and weak euro environment until we see a move either way in inflation at which point we will either see further stimulus or else a recovery in the region, both of which should be good for the markets.

Ongoing weakness in the likes of Germany have really been compounded recently and show that the central powerhouse of the Eurozone might have more than just a cold.

For this reason, I believe that both Mario Draghi and Angela Merkel are aware of the need to act decisively should we see yet further downside.

With any monetary policy scheme that doesn’t include the words ‘asset’ and ‘purchase’ looking particularly defunct and blunt, it is clearly time for each country to start looking at raising investment and fiscal expansion could be just as important as action from the ECB.

The feeling is that should we see QE implemented, then it would be something that would last for a long time and thus I am sure Draghi would prefer not to embark on such a move unless absolutely necessary.

Thus the onus is really on Merkel as much as Draghi right now.

Durable Goods Expected to Plummet After Jump

The US session is largely expected to be geared towards the release of durable goods and unemployment claims figures later today.

The most notable of these will likely be the durable goods figure which is expected to absolutely tank following the largest monthly rise in well over a decade last month.

This month is expected to come back with a bang, with the surge in orders taken by Boeing that were responsible for the massive July figure meaning that this month will see a significantly negative figure.

Estimates are looking at something between 15-20%, yet it will be hard to tell with any degree of accuracy exactly where this month’s figure will land.

The fact that we are seeing such volatility in this figure is a damning indictment as to the reliability of it to properly gauge any of the other lesser durable goods orders and for that reason people will be looking carefully at the core durable goods figure to check for the rest of the sector, with aircraft orders stripped out.

In which case we are expecting a move back into positive territory from -0.7% to 0.7%.

 
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.

Indices Look to Recover Despite Russell 2000 Making a Technical ‘Death Cross’ 0

Posted on September 24, 2014 by Frankie Lawson

US markets are expected to open flat, as the sell off that has personified the first half of this week is finally looking to ease somewhat.

The risk-off sentiment driven by US and Arabic raids in Syria is easing somewhat and a moderate response to yet further poor figures out of Germany point to a market which may be oversold.

However, with many in the markets pointing to a death cross in the small cap Russell 2000, many are wondering whether the technical are pointing towards further losses to come.

US futures are pointing towards a mixed open, with the S&P 500 and NASDAQ looking flat, whilst the DJIA is expected to open +2 points.

Yesterday’s news that the US has launched attacks upon Islamic State targets in Syria did not come as much of a surprise.

However, with the involvement of five Arabic states, this marked the first time in 23 years that the US has been joined by any Arab allies in any such military operation.

The threat is certainly known, yet the extent of the coalition that has been put together by John Kerry was yet to be exposed.

Today the UK woke up to an announcement from David Cameron that the UK is also not in a position to stand by without taking a military presence in this affair too.

However, probably the most important element of the attacks so far is the involvement of Saudi Arabia, which is a Sunni Muslim Kindom with traditional values.

The purpose of Kerry requiring the Iraq government to forge a new coalition which represents both Sunni, Shiite and Kurdish interests is to reflect the fact that this is not a war against Sunni Muslims, but instead the warped ideology of the Islamic State itself.

Thus with Saudi Arabia becoming part of this coalition, there is a feeling that it adds credence to the idea of a coalition of not only nations and religions, but also a coalition of Kurds, Sunni and Shiite forces which is absolutely key.

From a market standpoint, the interest really extends to how long and to what extent such a conflict is likely to last for.

The Pentagon’s decision to cite a timeline in years shows that no one expects this to be a quick fix and as such there have been worries, as reflected in lower equity prices and higher gold prices.

Weak Data Adds Pressure onto ECB and German Government

The European session has been dominated once more by disappointing figures out of Germany, following the close shave which saw the crucial German manufacturing PMI fall to 50.3.

Today it was the turn of the German IFO business climate survey, which fell to the lowest level since April 2013 (104.7) and represented a fifth consecutive fall in this measure.

This negative outlook is likely to be largely affected by Russian sanctions and has led to IFO commenting that the ‘Germany economy is no longer running smoothly’.

Ultimately today’s release adds yet more pressure upon both the ECB and German government to act in tandem.

Mario Draghi is no doubt moving closer towards a potential shift to implement QE with each measure that fails to generate growth of inflation and output.

However, there is also a case to answer for the Angela Merkel who must surely start looking to release the fiscal handbrake and start spending to generate greater growth for the greater good of the Eurozone as a whole.

With a report by Allianz highlighting that the low ECB rates tend to redistribute wealth from Germany to the periphery, it is surely only a matter of time until internal action is sought as the priority rather than relying upon Draghi et al.

Russell 2000 Sees ‘Death Cross’

The technical analysts amongst us have been watching the Russell 2000 carefully this week, as a ‘death cross’ has appeared for the first time since Q3 2011.

Now this move of the 50 day simple moving average (SMA) below the 200 SMA can be seen by many as a strong sign of weakness in the markets.

Furthermore, with the Russell 2000 often seen as a leading indicator of what is going to happen down the line in the major US indices, this is certainly something people are thinking could signal worry for the likes of the S&P 500.

However, the trend is your friend and with a long term primary uptrend still in play, there would be more indicators needed to gain any confidence of a major sell-off in the markets.

The US session is looking somewhat quiet with the new home sales data representing the only major data point to watch out for.

Monday’s poor existing home sales release showed a potential weakness in the market over August and as such I am cautious about some of the bullish estimates in the markets.

Also be on the lookout for the speech from Fed FOMC member Loretta Mester who is due to discuss monetary policy and her economic outlook in Cleveland later 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.

Commodity Markets Rally as Coalition Bombing of ISIS Raises Escalation Concerns 0

Posted on September 23, 2014 by Frankie Lawson

European and Asian markets are continuing the negative start to the week, posting further losses following a raft of poor Eurozone PMI releases this morning.

This comes despite a strong Chinese manufacturing PMI figure overnight, which managed to keep only the Shanghai Composite above water.

Meanwhile, the shelling of ISIS positions saw the first of many coalition military operations against the militant group within Syria.

US markets are expected to follow European indices lower, with futures pointing towards the S&P 500 -7, Dow -43 and NASDAQ -17 points on the US open.

Today is clearly dominated by the release of various PMI figures across China, the Eurozone and US.

Measuring the outlook of purchase managers within specific industries in relation to business conditions such as employment, demand and prices, the PMI figures typically provide markets with an idea of exactly where production, exports and jobs figures are going to move in the coming weeks and months.

The Chinese HSBC manufacturing PMI release overnight has been absolutely key in determining the degree of weakness within the manufacturing sector during the H1 slowdown this year, given the focus upon SME’s (small to medium sized enterprises).

However, despite the clear influence of this figure, today’s strong reading made little impact upon the Asian markets, with the Shanghai representing the only market to post a gain.

This inability to respond positively to strong data out of China shows an innate weakness within the markets, and geared us up towards the release Eurozone figures which were expected to follow the pattern of weak figures seen in recent months.

Europe Continues to Disappoint

True to form, the figures out of the Eurozone came in to the downside yet again, with the only main boost coming in the form of the French manufacturing sector, which managed to rise from 46.9 to 48.8.

However, with the French manufacturing and services sectors now both contracting, there is little to shout about across the Channel.

German manufacturing appears to be following suit, with the current level standing a mere 0.4 away from contraction (50.3).

Ultimately, the Eurozone is in a mess, with inflation, growth, jobs and industry all weak.

This is music to the ears of Vladimir Putin whose actions have driven the imposition of sanctions from the likes of Germany and France.

However, with those measures showing little signs of easing due to ongoing Ukrainian conflict, there is clearly an underlying threat to Eurozone growth and it is something that will have to be addressed sooner rather than later.

Mario Draghi has taken various steps, which have failed to make a significant impact as yet.

However, as seen in his Jackson Hole speech, the feeling is that this could be a problem which has both fiscal and monetary solutions.

It will be interesting to see whether the emphasis will shift towards greater spending from the likes of France and Germany.

Coalition Targets ISIS

Overnight, the US was joined by their ‘coalition partners’ in attacking a number of ISIS positions in Syria.

This represents both the first attack upon the ‘Islamic State’ within Syria (without the permission of Assad), along with the first attack of Middle Eastern countries upon the terrorist group.

Of the coalition partners involved, military jets from Bahrain, Saudi Arabia, Jordan and the UAE were all cited as being involved in today’s attack.

This is a major step given the importance of involvement from forces in the region and to some extent will appease the fears of many within the US that this will be another war which will be seen down the line as the US against Islam or the Middle East.

The threat of ISIS is clearly as relevant to those within the Middle East as it is to the US and a global effort to avoid the genocide, beheadings and slavery that has been commonplace under the groups expansion is clearly something which is going to be one of the biggest global challenges this decade.

That being said, the escalation of the conflict will of course raise questions over the risk appetite of many within the markets, who are no doubt worried about a major war which appears to be unfolding.

As such, commodities such as gold and oil have seen a round of buying this morning, with global indices selling off.

However, the moderate degree to which such moves have occurred shows that there is a degree of inevitability to today’s announcement.

Fed Speeches in Focus for Clues on Direction

The US session looks somewhat more quiet from an economic data point of view, with markets generally focusing upon speeches from two FOMC members, Powell and Kocherlakota.

The FOMC has been in spotlight over the past 24 hours, with yesterday’s announcement that the Philidelphia Fed President William Plosser will retire in March 2015.

This is a major shift, with Plosser representing the most hawkish and vocal dissenter of the committee.

However, with regards to today’s speeches, the interest will largely be geared towards Jerome Powell, given the fact that Narayana Kocherlakota already spoke overnight and will thus be likely to repeat much of the same comments.

Kocherlakota cited low inflation as an ongoing worry and thus there is the chance that monetary policy will remain accommodative for a longer time than desired, simply to help raise the rate of price growth.

It will be interesting to see if Powell will tread a similar path and given the typical method of committee members preparing the ground for any changes in policy from the Governor through their public views, it is likely we will see an estimate of when rates will rise from a member well ahead of Yellen herself.

 
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.

US Stocks Look for Retail Sales as UK Markets Remain on the Edge of their Seat 0

Posted on September 12, 2014 by Frankie Lawson

It’s been a very quiet week in the financial markets and European indices are on course to end on a mixed note, while US futures are pointing to a slightly weaker open.

The FTSE and the pound are being well supported again today after the latest YouGov poll showed a u-turn in the voting on Scottish independence with 52% of people saying they would vote no.

While this isn’t exactly a huge swing in the voting, with the previous poll showing 49% against independence, the mere fact that its moved in favour of staying a part of the United Kingdom has brought some calm back to the markets.

The worst part of all of this is the fact that no one really knows what will happen if Scotland votes for independence and it’s that uncertainty that is freaking people out.

With the UK enjoying a strong recovery at the moment, especially compared to the US and the Eurozone, this is the last thing it needs.

Once this vote passes and the people of Scotland vote to remain a part of the UK, which I am sure they will, people can once again start to focus on the good news story that is the economic recovery.

US Recovery Still Reliant on the Consumer

The fresh batch of economic sanctions that the EU has imposed on Russia are likely weighing on sentiment today, which is probably largely responsible for the weaker end to the week.

We have already seen that these sanctions don’t only harm Russia, there are consequences for the countries imposing them, and while they are necessary, the markets do not respond well to them.

The US session today is likely to be another quiet one although there are a couple of notable economic releases for traders to watch out for.

The numbers give an overview of how the consumer has been spending of late and how they are likely to act going forward, so they are likely to be tracked very closely by traders and could have a significant impact on the markets.

The consumer is extremely important to the US economy and any drop is spending or confidence will be concerning.

As it stands, we’re expecting a 0.6% increase in retail sales and a rise in consumer sentiment to 83.2 which is very encouraging.

The US recovery has been very strong over the last six months and if it continues at this pace, the Fed will have to consider bringing forward its first rate hike.

We’ve already seen this week that investors are starting to price this in after rumours surfaced that the Fed will not release such a dovish statement next week, withdrawing its commitment to keep rates low for a considerable amount of time after the end of asset purchases.

If this does happen, we may well see further pricing in of an earlier rate hike.

The S&P is currently expected to open unchanged, the Dow down 3 points and the NASDAQ unchanged.

 
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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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