Markets Subdued Ahead of Earnings Next Week

Hello and good morning. Friday the 12th of April, just gone 7:40 here in London. We'll have a quick look over the markets, how we're trading, uh, going into the beginning of the European session, uh, discuss any stories from, from yesterday in the week that's led us up to now in what is likely to be a bit of a, a more quiet morning, afternoon, and Friday in general as we head into the earnings, or the main part of the earnings next week and the week after. Just looking at the markets currently trading now, you can see the S&P just really struggled again to get above the 2,900 here in the futures. Another rejection for the fourth time of asking on that hourly chart. The last test coming midday and it just couldn't break above. Is today going to be the day where we close the week? Of course will be pretty important. And yeah, I mean, we're just trading 5 points below now after a bit of a push lower into the back end of the European session yesterday. The pound, pretty quiet at the moment. Of course, Thursday yesterday being the, the day that they they broke for Easter. Uh, we'll go through a quick summary of everything Brexit-related from yesterday, but in terms of new developments, not too much there to be aware of. The euro had a decent push higher in, in low-volume trade this morning, and we're, we're nearly at the top end of the range that we had this week, that high that we had from, uh, the Wednesday just, uh, an area to be aware of, just a bit above that, that high from the 25th, 27th. And you've also got a fib level to, to be aware of. The yen yesterday had a, a pretty poor day, a break of an early morning trend line, uh, and with the, the sentiment now shifted from China trade talks to Japan trade talks next week, uh, just weighing perhaps on the yen this morning. The Aussie dollar To finish up the, the currencies, again breaking a trend line, but this time into the back end of the session, has recovered slightly now. Just in the last few minutes we've had some delayed Chinese data. The trade balance, which is— well, you can't actually see it on here— has come in better than expected, uh, back to levels seen a few months ago at a trade balance of 30 billion from the 7 expected. Imports, as usual, negative as had to be the case for the last few months, and exports up 14.2%. So any weighting that that might have on equities would be worth keeping an eye on in 15 minutes on the, the E— on the London Open as volume starts to pick up. But just going back to, uh, the, the calendar highlights from this week, it did promise to be a good back end to, to the week in general when I I was looking at this Sunday night when, when Anthony posted it. I was eyeing up Wednesday, Super Wednesday they called it. Let down a bit yesterday, had the potential to, to be a decent day if the follow-through from the, the PM meeting the EU or the ECB or the minutes the previous day had anything to really offer, but it didn't. So we were talking in the briefing yesterday about how the morning would likely be quiet, and it was. And then the afternoon offered a couple of, uh, opportunities, but it was pretty subdued. As you can see, the headline is, is people sort of waiting for the earnings. So we have some, some big, big companies next week— Netflix to, to, to, to talk about. You've got Goldman Sachs as well early on. So ones to, to sort of focus on for, for next week, and the market will do so as well. Um, this is a quick summary of the headlines that have come out this week. Uh, really Monday and Tuesday, non-post-nonfarm payrolls are always going to be quiet, and that's continued here. We moved on to Wednesday where we had the UK GDP numbers that came in better than expected. However, the market didn't react. Obviously Brexit the main focus, and that's going to be the case for some while. However, with, um, the the Parliament taking a bit of a break, you guys might be in for a bit of a treat as we talk a bit less about Brexit. And what may drive markets now will be the, the source comments that come out. And, uh, as with those, as like we saw with the, the Merkel ones on, uh, the— if I switch back to the chart— on the 9th, so that'd be on the Tuesday. So those source comments, as soon as they come out you get the opportunity for the rejection of those as well. So something just to, to bear in mind going forward for, uh, the next sort of couple of weeks until they return on the 23rd, so in 11 days. Also on Wednesday we had the ECB. Um, they were, to be honest, I thought completely as expected. And, and the reaction, albeit initially off the, the sort of the press conference, was was slightly more dovish, we did recover pretty much straight away. And since then we have come back into the range of yesterday before pushing higher this morning. So key level just to be aware of, as mentioned, above the R1 and the futures and that high going back from the 27th last month. But the ECB, as was the last meeting, I would almost push that to the side. Yes, they were dovish, but life seems to have gone on Following the ECB, we had the FOMC. The FOMC were slight— well, the market reaction was slightly hawkish on that hour, uh, where it came down. But yeah, not, uh, not too much in the follow-through from that. I'd say one market that was possibly leading off a stronger dollar would have been the, the gold here. You see, yesterday we did have a decent push through, uh, into the afternoon London here. Breaking through down to the S1, to the 1,300. And, and since then we have had a slight recovery, but as gold can do, uh, it can have those days where it pushes low. And I suppose much of this would be attributed to a slightly stronger dollar across the board yesterday. On the final thing on Wednesday, we had the, uh, the PM out in Brussels till early hours of the morning, and And fair play to her, she came out and did a statement and the market didn't really react too much, which I suppose is not a bad thing, as everything that was expected for once with Brexit, you know, you know, came to fruition. The idea of a longer extension, no deal off the table, and we have the October 31st Halloween extension, or at least that is what they are saying. Whether that gets done or not remains to be seen. Of course, they can leave earlier but that's not really going to be the case for the next sort of couple of weeks, I would suggest. May still aims to leave next month if a deal cannot get done. Obviously, we were saying earlier how they have to hold the, the EU elections or risk or go out, leave on June 1st with no deal. So let's do that, move on, don't cause a scene about it, would be my advice. Of course, the The headlines won't make it that easy. The PM also hinted yesterday at a possible compromise over a customs union. So this was arguably two of the, or one of the two of the sort of main stumbling blocks between Labour, Jeremy Corbyn, and the Conservatives. The differences of views on customs union and also the second referendum. May has repeated, you know, not necessarily that you have to believe every word a politician says, but May has completely gone against the whole idea that there's ever gonna be a second referendum. And while that was Labour's policy to sort of drive forward with, you know, she's standing firm on that. However, the customs union supposedly saying that there's actually less differences than people do think. So into the backend, well, into early afternoon yesterday, Theresa May suggesting that there isn't much difference between Labour and her government on their trade proposals. Her comments indicate a customs union is a possible area for compromise. So this is, is positive. And you know, if these talks do progress— while I don't necessarily think that they will— this could help support the pound in the short term. And if the customs union, you know, is put forward to the EU, well, they have no obligation to actually accept any changes that the, the UK makes. So we could just keep going around in circles until we get down the line to October or whatever as well. So back to the calendar, uh, Brexit, I'm going to keep it pretty, pretty much what that was. I think it's, uh, going to be a couple of days rest where everyone can just relax without Brexit headline. And today the, the calendar is pretty slim as well, um, with it being the last day of the week. Unless you have your sort of inflationary numbers or your non-farm payrolls or a big meeting, it usually is relatively quiet quiet anyway in the back end of the session, uh, into the afternoon, and, and much more so today. I really do feel it's going to be a pretty quiet day as the market looks forward to earnings next week. And you're seeing that, uh, by the, you know, the, the stock struggling to get above 2,900. So they're probably just waiting for how the earnings come out to take their cue whether we can push higher or not. Points of interest today, like I said, we had the Chinese data out earlier mix, but a tiny bit better on the trade balance, but not too unexpected there as well, that coming out a bit later than expected. This morning we have some industrial production, but from February, so old data at 10 AM, and that's really the, the data highlight of the morning. So pretty quiet one, lackluster trade I would suggest for, for the European session. Data into the afternoon, 1:30, import and export prices. University of Michigan, uh, preliminary sentiment is always one to keep an eye on, so that could be a potential mover at 5 o'clock. These numbers already quite high on a sort of multi-year basis. Uh, speakers midday, you've got Weidmann, one of the, or the most hawkish ECB member, so that'll be again something to just sort of have marked up on on the chart. 12 o'clock, what's he gonna say, uh, and how that could move. Speaking at the IMF, and not the only one, uh, Mark Carney, 5:30, uh, as well speaking there. So anyone that is sticking around and doesn't fancy wrapping up early for the weekend, Mark Carney at half 5 will be something to keep an eye on. Other movers in the market yesterday to, to get to where we are right now, if we just switch back over to the charts, oil had a bit of a push into the back end of this session. You can see, well, if we go back to the last couple of days, you can have the, the DOE, the mixed DOE, where we had a bigger build but also a bigger draw in gasoline. The market was brightly confused. We did push higher into the back end of the session, only to drift lower yesterday in its back end as well. We have had a slight recovery today, but you can see the commodities in general yesterday just just coming under a bit of pressure, and that helping weigh on the Aussie to probably to the, the back end of its session yesterday, uh, as well. We get a recovery here, um, then I would just from a technical point of view probably worth having, uh, a bit of a trend line going on from that high down to yesterday afternoon's high, uh, but on that longer term chart in, in what has actually been for, for oil relatively quiet week, I would actually say, in price movement. Yesterday, uh, the beginning of, of the, the week, we had a decent push on the open, and other than that, it's been pretty, pretty sideways. And that's because, uh, we have a pretty key level here where people will be looking to take profit. Anyone that does think there's an opportunity to get short will, will be eyeing this up as well. Really good support going back to June, August last year, struggling to get above that breakdown in $1.385 as a zone. Whether this is the, the medium-term top or not, I don't know, but if I was long, this would definitely have been an area to, to either to take profit. 4 minutes away from the open, so just have a quick look how the DAX is standing in what has been for the DAX yesterday a pretty choppy day after hitting that R1. In terms of levels to be aware of, it seems whenever we do the briefing in the morning, it's always really relatively close to its pivot. And that's the same case here, uh, key support. You would argue just below that rather than the pivot to be focusing on. But having broken out this little range that we were in this morning, just over the last 15-30 minutes or so, uh, I think if you were looking to get long, you would want a break of that instead. Break of the highs of the day, and we can start to bring in, uh, the, um, the high of the week. But this market, like oil and like the S&P in, in general has been pushing higher. And it does look like we've just started to find a bit of a top here. Where we finish this week will be important. If the strength of the euro that we saw early morning continues, we break above that range, it might start— you might start to see the DAX just come under a bit of pressure due to that correlation there. Uh, the higher the week, 12,000, uh, uh, levels to, to be aware of. And also the high that we had back on the 19th of March, really key technical price point. And from where we close the week, this will be something I'll be keeping an eye on, uh, here as well. So can we get back below there or do we push on, uh, will be, will be interesting. Other headlines, so I was mentioning the, uh, the earnings next week. We have had some obviously for the last couple of weeks but not too much in the way of movement from those. It's not the, the big earners, uh, and, and the headline or the main headline Bloomberg were running on their markets section pretty much summarized it up there. Stocks mixed ahead of earnings, uh, and that's what it's going to be today. I don't really see much, too much in the way of movement. Yes, if the S&P gets above 2,900, you could get a decent push higher, but the market is now shifting its attention to what's going to come in the future rather than today. Uh, so yeah, yesterday in the S&P, pretty flat. Not too much going on there. Elsewhere we had the— if I have this up— I can't find it for now. Give me one second. I can't find the headline, but yeah, the idea that as China— here we go, yes, found it. Friday after all. As China trade war cools, Japan braces for its clash with Trump. So next week talks move to Washington between Japan and the US. This will be something to keep an eye on, as, you know, these trade talks, these trade deficits that have been building up over the previous years will be what Trump is effectively judged on if he wants to run for 2020 next year. So these talks will be key for him to stamp his authority and get a more favorable deal, but Japan wants to stand firm and, and, and keep it the same as they, they offer the EU and such as well. Trump wants to crack open Japan's agricultural market and reduce its $60 billion trade deficit. However, it was the, the US that asked for these negotiations, so from Japan's point of view, they're kind of saying, well, they wanted them, they come to the table and say what they They want to change and we'll go from there. So it's the US who should put to us what they want rather than us offering this and that's being before being asked as well. Trump, as in Trump fashion, said Japan is now negotiating. They haven't wanted to negotiate for many years but now they're negotiating. It's called tariffs. Classic Donald. Trump there. So that will be something to focus on from next week. Of course, Japan, the, the third biggest economy, and if, if that all kicks off as well— and it, it could, of course, knowing Trump, he could absolutely do his hardball approach to things— and then it gets, it gets worse before it gets better, then this yen could start to come under more pressure yet again. And you can see all this year following the the flash crash we had early, uh, January, we have pretty much been in a downtrend, give or take a couple of weeks where we have pushed higher. And if that is to continue, you can see we're pretty much trading on the low of the year right now. There's a fair bit of room to go before we can get to that double bottom we had in 2018. So one to, to have marked up for, for next week and any developments that you might hear through the wires today as as well, uh, could be potentially bad news for the yen. But as stocks are just hitting a bit of resistance as well, and the IMF issuing their third change to global growth in 6 months, you can see why investors are just sitting on the fence, especially ahead of earnings as well. So it might be that, uh, as we just have another quick look at my favorite market, the S&P, maybe that push above 2,900 to all-time highs might just be put on ice just for a second or two. Of course, 2900 here now on the, the daily continuation, also the, the high that we had back in 29th of January. So another key resistance point to focus on. Just going through the open before I go to the next headline, and the, the DAX and Euro Stoxx just coming under a touch of pressure. Remember that pivot just below where we're trading now, and a bit of support from late, uh, afternoon as well to focus on. Also yesterday, uh, quite a funny comment come out, and I mean, look, it could be true, it could be true. Part of the, the reaction we saw in the Fed was the market taking that, uh, the Fed were taking off the table that there's going to be a rate cut, um, or that they're to the back end of this year there may be a moderate rate hike. Whether— I think that was more just headline picking, to be honest, as it was much of a non-event. But yesterday, interestingly, Kudlow says interest rates may never rise again in his lifetime. I'm not sure on his exact age, I think he's, he's in the 70s. Whether that was just a passing comment or not just shows the situation we are in. And also I think the impact that Trump has had on, um, on the, on the Fed. Uh, whether that continues or not remains to be seen. But yeah, Kudlow coming out and saying that in his lifetime he wouldn't be surprised if rates did not increase. Uh, just to have a little wrap-up and look at that calendar again in, in what has been quite— 71, uh, Mike has just said 71. So Uh, yeah, I think there's still a fair bit of time left for there to be a rate hike, uh, Larry. Uh, yes, headlines this morning limited. Focus is going to be on next week, uh, with the earnings. Brexit probably put on pause for, for a while. Japan trade talks next week in Washington will now be a focus as well. ECB this week no change. Fed minutes, no change. The dollar this morning has been slightly choppy going into 10 AM this morning. Industrial production, old data, would— might make a note of it, but it's not going to be a massive market mover. 1:30 for the import and export prices, again, a couple minutes movement there max, I would say. University of Michigan sentiment, this would be if I was looking at one data point that has the potential to move markets that hasn't already come out. It's going to be this at 3 PM, uh, before we have some speakers. 12, to make a note for the euro-related products, with the, the hawkish Weidmann, uh, Pratt speaking at 1:45, who's more dovish, and then Carney at 5:30, also speaking at the IMF, uh, as well. Any questions, please do let me know. It's a relatively quiet and brief briefing, but that kind of summarizes what's going on in the markets just right now. Hope you all have a great, great day and a great weekend. Enjoy the Masters. Top one, actually one point just to finish on, and I'm gonna bring the Dow Jones into picture because seeing as yesterday was the first golf Masters, uh, of the year, golf major of the year, it's worth noting that with Tiger back in form The last time Tiger Woods won a major championship, back in 2008, if I had to circle the exact point, so it would have been, yeah, June that time. What did the stock market do? Financial crisis. So just keep an eye Sunday evening if Donald Trump is walking down the 18th and he's just about to put on a green jacket. You know what's going to happen to stocks. I hope you all have a great weekend ahead of you, and any questions, please do let me know.