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Reflect & Prepare

Reflect & Prepare

Fri, 19th May 2017 - Author: Reflect & Prepare

Oh no! I am getting sick of writing about Donald Trump, when he was amazingly elected as the president I knew my days would be filled writing about his misdemeanours. 

So why am I writing about this, the worlds major indices and companies have taken a hit this week off the back of the presidents alleged attempted to tell the former FBI chief James Comey to "let go" of an investigation into his former national security adviser, Michael Flynn. Not surprisingly equities sold off with the S&P 500 cash market falling just over 2% from its highs. The FTSE 100 reacted in similar fashion and fell just under 2% but it has now consolidated above the 7425 support level.

Elsewhere, in the world of commodities the OPEC saga continues. The 'will they wont they' scenario looked to be over when Russia and Saudi Arabia agreed that a 9 month cut would be needed and since the 15th we have moved up 4.6% and spot WTI has printed above the 50.00/bbl handle once more. There was a blip in prices during the week when inventory levels in the US crept up and this is going to be a theme for some time I believe. Base metals have now consolidated much to the relief of commodities companies. Iron Ore has started to move sideways and Copper has rejected 2.50 with some force and now moved back to 2.55. Gold climbed nearly $37 this week but then hit a technical level just above 1260 where the 61.8 fib level was lying in wait and today its back to around 1250.

FX markets where dominated by the weakness in the USD. The DXY fell from nearly 100 last week to 97.32 today, with the next meaningful level of support at 96.00. Aud has had a good run this week off the back of a good employment report and the stabilisation of commodities prices. GBP for me has been the star performer for the first time in 8 month GBP/USD traded above the 1.30 handle after the aforementioned weakness in the USD and some great retail sales data. 

In company news Vodafone said it has agreed to transfer 35% of its indirect shareholding in Safaricom to Vodacom Group for $2.59B, this led shares to rise past the 215p resistance and consolidate firmly above at around the 220p mark. Lloyd's came through the week having gone fully back into private ownership once more, the UK bank have performed very well this week and the tax payer has earned just below £1B in the process, great news!. SSE turned higher after stating results that were better than forecasts and lifting its total dividend, I believe this may come back to bite them in the backside as if UK PM May wins the election her price cap will put an end to the increases in dividends. Royal Mail perform well this week after it reported that its pre tax profits rose 25.5% but the group did mention that sales in the UK may fall later in the year which led shares to fall back to pre announced levels.

Hikma surprised the market with a downgrade of its FY revenue guidance, blaming the FX markets and the delay of an asthma drug application. Last but not least, Burberry stated they will issue a £300m buyback and told investors to expect profits at the upper end of their guidance, shares in the Co. have jumped 6.8% since the announcement and look to be targeting the 1750p resistance.

Next week we have much to look forward to! Data wise we have GDP from Germany, UK and the USA. The Bank of Canada have their latest interest rate decision and we see the release of the latest FOMC meeting minutes.

From an earnings perspective, things are starting to die down. De La Rue report on Monday and the currency maker may have capitalised on the new issue of £1 coins. On Tuesday Severn Trent report, Wednesday Marks and Spencer and Thursday is United Utilities. Look out for some previews during the week.



The Writer's views are their own, not a representation of London South East's. No advice is inferred or given. If you require financial advice, please seek an Independent Financial Adviser.


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Previous Comments
comment  Added: 25 May '17
"In an article I've read online it says that there was also a rumors that a deeper cut down on the oil production might be in order but rumors like these could lead to a disappointment if it is not approved.In addition to that, if OPEC cuts productions farther, oil prices would spike up which could cause consumer to look for other sources of energy and alternative suppliers. Source:"
- liloupieto

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