market relief

The FTSE 100 set a new record-high today this morning, and it is still in positive territory as banking and retail stocks are fuelling the positive move.  

Europe 

The rally in the euro is hurting the eurozone indices such as the DAX and CAC 40. The single currency has jumped as Germany bond yields are higher on the back of the reduction of the Bank of Japan bond buying scheme. Traders are moving their money out of German stocks and into German government bonds while the yield is attractive.

Sainsburys shares are in demand today after the retailer stated it had a record Christmas, and it now expects its full-year earnings to be slightly ahead of previous expectations. Revenue for the 15 weeks until early January increased by 1.1%, and analysts were anticipating a rise of 1%. The retailer now offers same day delivery for grocery shopping at over 90 stores, and the intention is to ramp that up as the service is in high demand. Online sales at Argo now make up 20% of all online sales at the group. The share price has been pushing higher since November, and if the bullish sentiment continues it could target 260p.

Ted Baker described their Christmas period as ‘good’ and announced they will hit their full-year target. The retailer saw a 9% rise in revenue between mid-November and early January. Profit margins at the fashion house stayed solid. The share price is up 8% today and hit its highest level in nearly one year.

US

Traders are taking their profits on US stocks as government official in Beijing are going to recommend the Chinese government should cut back on its purchases of US government bonds or perhaps even stop all-together. The authorities in China are questioning whether US government bonds represent good value or not. Traders are booking their profits on the US equites which have enjoyed a stellar run recently.

Shares in Eastman Kodak are up 60% after the firm revealed it used blockchain to build a new platform that will use its own digital currency, and it will be named the KodakCoin. The cryptocurrency craze has seen the share in the company snap out of the downtrend in has been in for the past year.   

FX

EUR/USD has enjoyed a positive run today as the increase in German government bond yields sparked an increase in demand for the single currency. The decision by the BoJ to reduce the size of their monthly stimulus package got trader thinking the European Central bank (ECB) might not keep their policy as loose as traders initially thought. In a way the markets were caught off-guard by the BoJ move so the knee-jerk reaction is that central bank’s may look to reign in their loose monetary sooner than expected.

The US dollar took a pounding from China after the Beijing administration stated it is going to slow down the rate of purchasing US government bonds, or even look to halt it altogether. The greenback sold-off on the back of it as China is a major purchaser of US debt.

GBP/USD has had a volatile session as the wider than expected trade balance from the UK put pressure on the pound, and then sterling rallied in the wake of the Chinese news, but the positive move was sort lived. In November, the UK trade deficit widened to £12.23 billion to £10.78 billion. Despite the various swings in direction today, the pound is still in its upward trend versus the US dollar, and it has been since March.

Commodities

Gold hit a new three and a half month high as the sell-off in the US dollar boosted demand. Traders are also slightly in risk-off mode which is adding to the buying pressure .Gold is off the highs of the session but the market have been rising over the past three weeks and its outlook is likely to remain positive.

WTI and Brent Crude oil have sold off in the wake of the energy information administration (EIA) report which showed yet another decline in oil stockpiles, while gasoline inventories increased. The oil stockpiles declined by 4.94 million barrels, and traders were expecting a drop of 3.75 million barrels. Gasoline inventories increased by 4.13 million barrels, and dealers were expecting a reading of 2.6 million barrels. It was the typical market reaction as oil initially jumped due to the drop in oil inventories, then in slinked in that gasoline stockpiles surged, which prompted selling.  

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