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Reflect & Prepare

Reflect and Prepare

Fri, 22nd Sep 2017 - Author: Reflect & Prepare

The FOMC meeting this week was taken in a bullish light from a USD perspective as the normalisation process looks set to continue. The Fed are going to look to unwind the balance sheet starting next month, the futures markets are also pricing in a higher chance of an interest rate hike (45% to 70% Dec). As the major economies look to unwind there QE induced balance sheets equities will need to adjust to the lack of cheap money. On the contrary, financial stocks will look to this favorably interest rates rise as HSBC, RBS and Lloyds shares all performed well this week. In the UK the strong GBP last week had a negative effect on stocks, this was caused but BoE Gov. Carney turned Hawkish. At the start of the week Carney kept his stance the same but the FTSE 100 consolidated and now trades between 7200 and 7300.

Today Teresa May gave her speech in Florence today, to be brutally honest it was not even worth the watch. I can't even think of one highlight from the speech worth mentioning, she said that no deal is better than a bad one (heard before) and also that there will be a 2 year window with some kind of register for new EU nationals entering the UK. 

In commodities markets, we have seen oil prices trade toward recent highs as more OPEC comments filter through to the markets. Today OPEC members stated that today's meeting was not to discuss a extension to the cut and the market was slightly disappointed but price held above $50/bbl. Gold lost some of its shine this week after the markets ignored the most recent Trump and North Korea row, however we saw some support at $1290 and price managed to break through the $1296 resistance again. Base metals also struggled this week, copper and iron ore both sold off and subsequently the miners struggled. The selloff was blamed on softer Chinese data but there is also profit taking we must consider as prices have rallied recently. 

In corporate news, Kantar Worldpanel data showed the food retail industry is showing sales had risen 3.6% in the 12 weeks to 10 September, the sixth consecutive period in which sales rose by more than 3% but down slightly from the 4% announced in August.  

Sticking with supermarkets Ocado sales have been strong, but its shares were trading lower as the company's third-quarter update included comments about a spike in costs as it completes the construction of its fourth and largest 'customer fulfilment centre'.

Ryanair has had a nightmare week with pilot strikes and in the last 2 weeks shares have fallen from 18.00 to just under 16.00.

Anglo American shares rose as Anil Agarwal plans to up his stake in the company to just over 20% from 13%.

IG Group traded well this week as record revenues in the three months to the end of August, boosted by strong overseas growth for the online trading broker as UK client numbers tailed off.


What to look out for next week:

Data: GermanIFO data, US CB Consumer Confidence, UK GDP, US Core Durable Goods, RBNZ Rate Decision, US GDP, German Employment, EU CPI, Canadian GDP.

Earnings Highlights: Carnival, Close Brothers, AA PLC, IGAS, Amur Minerals, URU metals and Carillion. 


Have a great weekend


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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