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FTSE Gains As Oil Trades At $50

Published 05/26/2016, 06:39 AM
Updated 04/25/2018, 04:10 AM

The oil rally is the leading story of the day. Brent crude traded above the $50 per barrel for the first time in six months after the weekly EIA data showed that US crude inventories slumped the most since April and imports fell; WTI crude is about to take over the $50 offers.

The FTSE is consolidating gains after having hit a four-week high yesterday. The 200-day moving average, 6145, is expected to lend a base to pullbacks for a potential expansion toward the 6300 on recovery in energy prices.

BP (LON:BP) (+0.66%)

Royal Dutch Shell (LON:RDSa) (+1.36%)

Miners surged more than 1% at the open and are leading gains in London.

Rio Tinto (LON:RIO) (+2.00%)

Glencore (LON:GLEN) (+2.00%)

Anglo American (LON:AAL) (+2.70%)

UK banks are under pressure this morning on news that financial complaints hit the third highest level on record. The rigid set of new rules since the subprime crisis have apparently fallen short of an ideal, secure financial environment.

HSBC (NYSE:HSBC) (-0.86%)

Lloyds (LON:LLOY) (-0.58%)

Barclays (LON:BARC) (-1.13%)

Standard Chartered (LON:STAN) (-1.42%)

The FX markets have been driven by a global US dollar depreciation after the services PMI data hinted at a slower expansion in the US’ services sector this month. A single data point will certainly not cause significant damage in the value of the US dollar. The current USD softening is perhaps due to a month-end book adjustment rather than waning optimism. The global stock rally backs up this latest opinion.

Asian stocks recorded their biggest two-day gain in more than a month on optimism that the global economy could cope with a rate rise from the Federal Reserve (Fed).

Japanese yen is attempting a rebound off the Asian session low of 109.42 against the US dollar, yet the pair is to bump against a thick resistance at 110.00.

It has been a volatile session for the Aussie as the 5.2% contraction in Q1 capital expenditure (versus -3% exp) first sent the AUD/USD down to 0.7161. The pair recovered above the 0.72 mark on broad based USD weakness. Intraday trend and momentum indicators remain favourable for a further expansion toward the 200-hour moving average, 0.7240.

Cable consolidates above the 1.47 level with rising potential to re-test the May 2nd high of 1.4770 despite the Brexit shenanigans.

Ryanair (NASDAQ:RYAAY) has been accused of breaking electoral law in its campaign to remain in the EU. The Electoral Commission requests that anyone planning to spend more than £10,000 campaigning in the referendum must register with it. Leave camp accused Ryanair of having spent much more than £10’000 for its ‘Brits-in’ campaign. This had little impact on the stock price.

The EUR/USD is marginally bid today. Although a recovery to 1.12 mark could appear as an appealing buy, the market remains fairly short on the euro with prospects of a further slide toward the 200-day moving average, 1.1070.

Gold gained for the first time after six days of losses. The softer US dollar could give a hand for a recovery toward the 50-day moving average, $1250.

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