The FTSE surged to 7067p at the open in London. All sectors opened in the green, following a positive close in the Asian markets.
Yet, the high volatility in the global equity markets hint that the post-Deutsche (LON:0H7D) panic may not be over. Although we have seen an aggressive rally in most of the FTSE sectors at the open, a part of these gains could be short-lived.
The UK’s financials (+1.37%) are better bid this morning, in contradiction with the new perspective posterior to the UK PM May’s announcement that the City of London will not benefit from any favour during the Brexit procedures. London Stock Exchange (-0.52%)diverges negatively on concerns that a significant part of the financial business could leave the UK. Citi Bank’s UK Head warned that jobs in London’s financial sector would move to European Union countries ‘regardless of what deal is struck on access to the EU financial services market’.
Industrials and energy stocks are top performers.
Royal Dutch Shell (LON:RDSa) (+2.98%) and BP PLC (LON:BP) (+1.13%) rank among the best performers on a sweet combination of a significant depreciation of the pound and the strengthening positive trend in oil, giving signs of a sustainable recovery posterior to the latest OPEC agreement to cut production.
Randgold Resources (LON:RRS) (-0.64%) and Fresnillo (LON:FRES) (-0.22%) are under pressure as gold traded below its 100-day moving average ($1310) for the first time since June. Whether or not the price of an ounce could break the $1300 support depends on US dollar appetite heading into Wednesday’s ADP report, and Friday’s nonfarm payrolls in the US.
Aussie holds support as RBA maintains status quo
As expected, the Reserve Bank of Australia (RBA) maintained its cash rate unchanged at Lowe’s first meeting as central bank governor. The AUD held support after the verdict, as the Australian sovereign bonds pared losses.
From a technical perspective, the golden cross formation (50-hour moving average crossing above the 200-hour moving average) could encourage an extension of gains towards 0.7730 (Sep 8th resistance), though the downside risks prevail as the global risk appetite is fragile. Buyers are eyed at 0.7649/0.7650 (minor 23.6% retracement on Sep 15th to Sep 29th rise & 200-hour moving average), before 0.7612 (major 38.2% retrace).