Daily Archive: May 15, 2017

May
15

GFC 093: Do A Retirement Dress Rehearsal Now So You Don’t Blow It Later

May
15

FTSE 100 closes at record high as oil price rallies – as it happened

Blue-chip index hits 7460 points, led by miners
China’s ‘belt and road’ plan drives rallyRussia and Saudi back oil curbs
Introduction: Markets rally in Europe and Asia
Greece is back in recession

5.13pm BST

A surge in the oil price, a boost from China’s $900bn infrastructure plans and a victory for Angela Merkel in a key German state election combined to push markets higher, despite the worries caused by the global cyber attack. But Michael Hewson, chief market analyst at CMC Markets UK, said:

It’s been another day of records for the FTSE100 and the German DAX, as they both put in new record highs, however the glacially slow progress above these new highs is a little worrying, which might suggest some investor nervousness at embarking on aggressive buying at such elevated levels.

4.09pm BST

News from Saudi Arabia and Russia that they favour extending the current oil production cuts until March 2018 is not a game changer but should help stabilise crude prices, according to Capital Economics. Its chief global economist Andrew Kenningham said:

The first point to make is that this has not radically altered the outlook for oil prices. An extension of up to six months had already been widely anticipated, so this is simply a little longer than expected. That may be why oil prices rose by only about 3% today, whereas they rose by around 15% when the cuts were originally agreed at the end of November 2016. Brent crude remains comfortably within the $45 to $60pb range in which it has been trading since last November.

Further ahead, we think the agreement will help to lift Brent crude prices towards our forecast of $60pb by year-end. Even allowing for compliance slipping a bit and US shale production continuing to exceed expectations, these cuts should be enough to rebalance the oil market and bring oil stocks down.

3.34pm BST

The FTSE 100 is still heading for a record closing high, although it is currently off the day’s best levels, but with a raft of UK economic data due this week, the question is whether the index can maintain its good run. Connor Campbell, financial analyst at Spreadex, sayd:

The index hasn’t quite been able to climb back to the 7460 all-time intraday high it hit soon after the bell; however, it is still lurking around the 7450 mark, keeping it on track to close at a new record peak. That’s mainly thanks to its buoyant commodity sector; Brent Crude’s 2.5% surge – with Putin throwing his backing behind the continuation of an oil-output cap – has obviously lifted the oil stocks, while the miners were pleased with the announcement of a $900 billion infrastructure spend in China.

It is going to be interested to see if the FTSE can hold onto that growth tomorrow. The latest inflation figure is released on Tuesday morning and, with analysts expecting the reading to climb from 2.3% to 2.6% month-on-month, the pound could be in for a bit of a boost. Since Brexit that has tended to mean bad news for the UK index, though it is worth noting that cable has managed to keep its head above $1.29 without troubling the FTSE’s record-breaking rise.

3.15pm BST

More positive news from the US housing market.

The National Association of Homebuilders’ index has climbed to 70 in April, compared to the 68 level reached in March and expected to be repeated last month.

NAHB: Builder Confidence increased to 70 in May https://t.co/FqClWotZMs pic.twitter.com/E38IAgsALs

2.38pm BST

US markets are also benefiting from the rise in oil prices, with investors shrugging off the worldwide cyber attack which began on Friday.

The Dow Jones Industrial Average is currently 62 points or 0.3% higher, while the S&P 500 and Nasdaq Composite both opened more than 0.1% better, with the latter at a new record high.

2.17pm BST

Back with Greece, and credit rating agency Moody’s has kept its stable outlook on the country’s banks, citing the improved prospects for profitability.

But it warned that problem loans remained high and were a severe challenge for Greek banks, although they should start declining from around 45% of gross loans at the end of 2016 over the next 12 to 18 months.

2.01pm BST

Time for a recap…

Britain’s stock market is on track for a new record closing high, after hitting its highest ever level in early trading.

A new record high for the FTSE 100 this morning was driven in no small part by oil firms, which have been boosted by further talk among oil ministers that more production cuts will be necessary. What should worry FTSE bulls is that the index is exhibiting similar characteristics to the S&P 500 – namely that the rally is being powered by smaller and smaller numbers of rising stocks each day; this doesn’t mean a correction is around the corner, but it does raise the prospect of a reckoning that could be ugly.

#Greece is back in recession. GDP has contracted 0.1% in Q1 2017 after shrinking 1.2% in Q4 2016. pic.twitter.com/psz5nGCKkp

#Macron appoints a prime minister from the right-wing party Les Républicains — Edouard Philippe, mayor of Le Havre, known as centre-right

Long predicted but still significant. From the centre-right, could boost Macron’s support from that quarter in upcoming general elex.

Édouard Philippe it is! Ticking many boxes: young (46), centre-right (Juppé), compatible (reforms, climate), experienced (mayor, MP, UMP).

The (left part of the) PS won’t like it though. First political test for Macron challenging his momentum ahead of the June elections.

Edouard Philippe is a Juppé ally from centre-right. Logical choice to appeal to conservatives. Important for Berlin: EP is fluent in German!

1.40pm BST

Newsflash from America: The factory sector of New York state has weakened this month, adding to a recent run of disappointing US data.

The Empire State manufacturing index has dropped to minus 1, from 5.2 in April, dashing hopes of a rise to 7.0.

Empire Manufacturing (May) continues the recent trend of softening US data… first negative print since October 2016 pic.twitter.com/8v91MMQneY

New Orders, -4.4 pic.twitter.com/vQ6vWg20LE

1.08pm BST

The US stock market is tipped to rise slightly when trading begins, in 80 minutes.

US Opening Calls:#DOW 20928 +0.17%#SPX 2394 +0.14%#NASDAQ 5687 +0.01%#IGOpeningCall

1.06pm BST

Holiday firm TUI has bucked today’s trend, by falling 4% to the bottom of the FTSE 100 leaderboard.

Sterling remaining at rates significantly lower than those seen prior to last year’s UK Brexit referendum.

In line with TUI’s hedging policy, the UK Source Market had already hedged a significant proportion of its foreign currency requirements ahead of the Brexit referendum, however on the unhedged portion this results in higher costs which will impact the UK business in the second half of the year.

12.40pm BST

JP Morgan’s army of City workers needn’t pack their bags quite yet. But it does appear that the Wall Street bank is committed to moving jobs to Ireland, thanks to Brexit.

JP Morgan announced this morning it has bought a new office block at Dublin’s Capital Dock development. The site will hold 1,000 workers, which is twice its current workforce in the Irish capital.

Related: JP Morgan appears to make good on Brexit threat with new Dublin office

11.57am BST

Newsflash: Russian president Vladimir Putin has confirmed that Moscow is keen to extend the current deal to curb oil production by an extra nine months.

“I have met with the heads of the companies … and we support the proposal.

11.32am BST

Via Fidelity, here’s a chart showing how Britain’s stock market has performed under every prime minister since Ted Heath:

“While on the face of it the Conservatives appear to have delivered more impressive stock market returns than Labour in recent years, the economic and market environment has a far more important bearing on the performance of the stock market than who the current occupant of Number 10 is.

“For example, while UK stocks rose by over 500 per cent under Margaret Thatcher (which some have credited to her decision to deregulate the financial markets), stocks across the globe enjoyed similar returns. Similarly, while the markets produced a negative return under Gordon Brown, this was a reflection of the financial crisis rather than Labour party policy.

10.55am BST

The oil price is continuing to climb, helping to keep the FTSE 100 at record highs.

10.28am BST

Bad news from Greece… the country’s economy has suffered another contraction.

Greek GDP shrank by 0.1% in the first three months of this year, following a 1.2% plunge in October-December. That puts Greece back into recession, in a reminder of its fragile economic state after years of austerity and political upheaval.

#Greece #GDP Growth Rate QoQ Prel at -0.1% https://t.co/D0TuYOjUOR pic.twitter.com/iTMDZ40Bw7

#Greece back in recession as “flash” estimate shows #GDP edged down 0.1% q/q in Q1 2017 after Q4 2016 drop of 1.2% q/q. Down 0.5% y/y in Q1

Press Release: Quarterly National Accounts (estimates) (Q1 2017) #GDP #ELSTAT #statistics #data #economy https://t.co/ZhfK4xSm37 pic.twitter.com/gHLTkY5yq1

10.02am BST

Chinese president Xi’s ambitious infrastructure plans are driving shares higher around the globe, says Kathleen Brooks, research director at City Index.

As mentioned earlier, China has been proudly outlining its plans for new land and sea connections with the rest of the world. It aims to spend hundreds of billions of dollars improving ports, roads and rail links in Europe and Africa, to spruce up old trade routes and create new ones.

The big news over the weekend was a Chinese government summit that announced the new “Silk Road” project, which aims to forge peace, inclusiveness and free trade across the world. China has pledged $124bn in infrastructure spending to bring this into action, and markets are cheering Chinese largesse, with Brent crude rising $1 on the back of this news at the start of the week.

China’s spending pledge has underpinned risk sentiment more generally this morning, with European equities opening higher and US futures pointing to a stronger open on Wall Street.

Nuova Via della Seta: #SilkRoad e il progetto “ONE BELT, ONE ROAD” renderà il Mondo un posto più sicuro https://t.co/VGHsuNnYOA pic.twitter.com/5YD0qq8Plz

Related: The $900bn question: What is the Belt and Road initiative?

9.37am BST

The FTSE 100 is being boosted by Saudi Arabia and Russia’s commitment to extending their current deal on oil output curbs, says Connor Campbell of SpreadEx:

The FTSE is (oil) barrelling towards a fresh all-time high this Monday, ignoring both the ‘WannaCry’ ransomware attack of last Friday, and a selection of weak Chinese data that saw industrial production drop from 7.6% to 6.5% month-on-month.

Rising 25 points to lurk just above 7450, the UK index is already at a new peak – now it just needs to stay there. The main thrust of the FTSE’s growth is coming from the commodity sector, itself led by Brent Crude’s recovery. The black stuff surged 2% after the bell – and now sits just under $52 per barrel – having been lifted by reports that both Saudi Arabia and Russia are willing to support an extension of the current output-capping agreement.

9.27am BST

Traders have been rushing to buy shares in cybersecurity companies following the WannaCry ransomware outbreak that struck Britain’s NHS on Friday, and companies and users across the globe.

Cybersecurity stocks and tracker products rose at the European open on Monday after a global “ransomware” attack disrupted car factories, hospitals, shops and schools around the world.

A London-listed cybersecurity exchange-traded fund ISE whose holdings include software provider Cisco Systems and cybersecurity firms Fireeye and Symantec rose 0.9 percent at the open.

Cybersecurity stocks rise after global ‘ransomware’ attack https://t.co/ES2ojfnYUj w/ @helenmariareid via @Reuters #stocks #ETF pic.twitter.com/tcLk6o4a9C

Related: Ransomware attacks: 29,000 infections in China as working week begins – live

9.17am BST

Update: The FTSE 100 has nudged a new all-time intraday high of 7460 points.

That puts the index of top UK -listed companies firmly on track for a new closing high at 4.30pm as well.

Britain’s small caps join #FTSE100 at new record high as oil jumps after Saudi & Russia extend cuts until March 2018 https://t.co/KbzIQfSf2J pic.twitter.com/c7u6C3YRPk

9.06am BST

Anyone who bought British shares the day after the EU referendum is sitting on a very large profit.

Today’s rally means the FTSE 100 has now gained 20% since the close of play on June 24th, when closed at 6138 points.

Higher commodity prices have helped the Dax and FTSE 100 to record highs this morning https://t.co/42o6cbwfY8 pic.twitter.com/MJ02b9R18Y

8.51am BST

Germany’s stock market is also on a tear this morning, hitting its own all-time high.

The DAX index of top German companies has gained almost 0.5% this morning, extending its recent rally.

8.32am BST

China’s ambitious economic plans appear to be driving the London stock market to today’s record high.

Related: China’s Xi lays out $900bn Silk Road vision amid claims of empire-building

Metals prices are advancing, helped by optimism about China’s “one Belt, one Road” program.

8.20am BST

Boom! The FTSE 100 has hit a new all-time record high at the start of trading in London.

Britain’s blue-chip index has gained 23 points to 7458, as energy producers and natural resource stocks rally.

8.04am BST

This chart from Bloomberg shows how the oil price jumped this morning, following the Saudi-Russia announcement:

Oil jumps nearly 2% after Saudi Arabia and Russia back the extension of output cuts https://t.co/MrFW40exyy pic.twitter.com/6ceOlWEczH

7.54am BST

The oil price has jumped this morning, after Saudi Arabia and Russia signalled their support for a new deal to cut production levels.

Brent crude – oil sourced from the North Sea – has jumped by 1.5% to $51.62 per barrel. US crude oil is also gaining.

“We’ve come to conclusion that the agreement needs to be extended.

“The two ministers agreed to do whatever it takes to achieve the desired goal of stabilizing the market and reducing commercial oil inventories to their 5-year average level.”

7.44am BST

Good morning, and welcome to our rolling coverage of the world economy, the financial markets, the eurozone and business.

After hitting a record closing high on Friday, Britain’s FTSE 100 may hit a new all-time peak when trading begins today.

Resilient Asian stocks edged up to a two-year high on Monday, shaking off threats from by a ransomware attack that locked some 200,000 computers in more than 150 countries at the weekend, a missile test by North Korea, and weak U.S. data.

FTSE 100 set to open at a record high

LT analysis shows #FTSE100 still not overbought on RSI. pic.twitter.com/gXkqEcfGtN

The German Chancellor who only decided to run again for a historic fourth term quite late on in the German elections later this year will be feeling quite happy having seen off her rivals at the SPD, and the challenge of their new leader Martin Schulz in state elections at the weekend, in North Rhine-Westphalia.

European indices set to open higher. #FTSE called up 15/20. Shrug off #WannaCry attack and cheer firmer #crudeoil and #Merkel vote

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