The FTSE 100 enjoyed a broad based rally yesterday, and it was the best performer in Europe.
The London market has lagged behind the major eurozone equity benchmarks recently, and yesterday helped make up for it. The FTSE is still far from the mid-January highs, whereas the DAX, CAC and IBEX all notched up levels not seen since early December recently.
Last night Apple posted fourth-quarter figures that just about topped estimates. EPS and revenue were $4.18 and revenue was $84.3 billion respectively, while analysts were expecting $4.17 and $84 billion respectively. The stock is expected to open over 4% higher today.
Today US trade delegates sit down with their Chinese counterparts. Some dealers have been sitting on their hands in advance of the meeting as a hopes aren’t overly high. Yesterday, we heard from Steve Mnuchin, the US treasury secretary, who stated he expects ‘significant progress’ to be made, but given the strained relationship between the US and China over the Huawei situation, the trade talks might suffer. Stocks experienced low volatility in Asia overnight.
The US CB consumer confidence survey dropped to 120.20 its lowest reading since July 2017. Retail appetite has been slipping recently, and the government shutdown is making matters worse. At 1.15pm (UK time) the ADP employment report will be released, and the consensus estimate is 178,000.
The Federal Reserve will release their interest rate decision at 7pm (UK time) and the press conference will follow at 7.30pm (UK time). No change is expected to the interest rate decision, but the update should provide dealers will an insight into what the Fed is thinking. Lately, the US central bank have softened their previously hawkish stance. China is cooling, the European Central Bank and the Bank of Japan have adopted a more dovish position recently, and that is likely to influence the Fed.
It was a busy day for sterling yesterday as political headlines dominated the news. Parliament backed the Brady amendment, which pledged to find an alternative solution to the Irish backstop. Shortly after the vote in London, a spokesperson for the EU, said Brussels would not renegotiate the withdrawal agreement, so it leaves Mrs May in a difficult position. Sterling is firmer this morning against the US dollar and the euro, but the UK is still facing a no deal situation unless something can be arranged between now and late March.
Oil rallied on the news the US imposed sanctions on Venezuela. Oil production in the Latin American country is in excess of 1 million barrels per day, but keep in mind in was in the region of 3 million barrels per day in the early 2000’s. The energy information administration inventory report will be announced at 3:30pm (UK time) and oil stocks are expected to increase by 3 million barrels, while gasoline inventories are expected to rise by 2 million barrels.
There are a couple of important German economic announcements today. The GfK consumer sentiment survey will be released at 7am (UK time) and it is expected to slip back to 10.3 from 10.4, and the CPI reading will be revealed at 1pm (UK time) and economists are expecting 1.7%.
At 9.30am (UK time), the UK will reveal the latest mortgage figures. Mortgage approvals are expected to be 63,000 and mortgage lending is tipped to be £3.45 billion.
EUR/USD – has been broadly pushing higher since mid-November, and if the positive move continues it might retest the 1.1570 area. A break below the 1.1300 region might bring 1.1216 into play.
GBP/USD – has been pushing higher for over one month, and if it holds above 1.3000, it might bring 1.3361 into play. Support might be found in the 1.2815 region.
EUR/GBP – has been pushing lower since the start of the month, and support might come into play at 0.8620. The 200-day moving average at 0.8863 might act as resistance.
USD/JPY – if it manages to hold above the 109.20 area, it might target 110.00 or 111.24 – 200-day moving average. 108.00 might provide support.