FTSE -7 points at 7268
DAX -12 points at 11571
CAC -8 points at 4880
Euro Stoxx -6 points at 3300
The US dollar appreciated against the majority of its G10 counterparts. President-elect Donald Trump will deliver his first press conference today. Expectations are high regarding Trump’s energy boost plans. The key talking points will likely include Trump’s key appointments as well as the shenanigans regarding his relationship with Russia.
Any stress or disappointment could cause a further pullback in the US dollar and the sovereign yield curve. The US equity futures traded flat in Asia. The skepticism kept the Dow Jones futures capped at $19809, the S&P 500 futures traded at $2260/2264. If, however, Donald Trump meets expectations, we could see another wave of enthusiasm in the US markets. The Dow Jones could resume its ascent toward the 20K level, while the S&P500 stocks could take another step up.
Asian stocks were better bid. Mining stocks (+2.62%) led gains in Australia. Iron ore miner Fortescue (AX:FMG) rallied 4.53% on the back of an approval to expand its activity, amid Port Hedland’s annual shipments reached a record high. Iron ore May futures surged 2.76%, giving a positive spin to the Aussie. The AUD/USD traded at 0.7383.
Nikkei (+0.40%) and Topix (+0.56%) gained on softer Japanese yen (-0.18% vs. the US dollar). The USD/JPY held ground at 115.00 handle, as the market remained heavily short-JPY. The US dollar leg is in charge of the short-term direction in the USD/JPY. All eyes are on Donald Trump’s presser.
Hard Brexit talks continue weighing on the Sterling. Cable extended losses to 1.2154. Rising selling pressures suggest a further slide to the mid-term support of 1.2080, before the 1.2000 mark. The euro-pound bounced lower after hitting a two month high of 0.8763 yesterday. Buyers are touted around the 100-day moving average, 0.8657. The UK’s manufacturing and industrial production data is due today and analysts expect a positive turnaround following October’s surprise contraction. Any softness in data could further weigh on the pound, while a solid read is unlikely to trigger a sustainable recovery in the GBP-complex.
The Bank of England (BoE) Governor Mark Carney will face the parliament today for a review on the effectiveness of the monetary policy adopted since the UK’s decision to leave the EU. Bloomberg reported that ‘Mark Carney is in the firing line’.
The EUR/USD is rangebound ahead of the European Central Bank (ECB) meeting minutes due on Thursday. The mid-term bias remains negative below 1.0708 (major 38.2% retracement posterior to decline caused by the US election). The resistance should hold at this level, unless the market prices out Donald Trump’s economic boost plans.
The lira is racing to the bottom. The USD/TRY hit 3.8951, while the EUR/TRY traded at 4.1108. The Central Bank of Turkey is suffering from a massive lose of credibility. Turkey faces a dangerous threat to its parliamentary regime. Political pressures and social unrest are on the menu. We stay clear from lira and lira denominated assets.
On the individual stock headlines, today’s pick is Hon Hai Precision Industry (TW:2317). Also known as Foxtonn, the main assembler of Apple’s iPhone announced a first annual sales decline on record. Apparently the China’s slowdown story and the Chinese phone maker Huawei’s expanding market share weigh on Apple and Samsung sales.
The FTSE 100 hit a fresh record, 7284p, in London yesterday. The FTSE futures eased 0.15% in Asia, while DAX (+0.17%) and CAC futures (+0.01%) were marginally up.
FTSE is called 7 points softer at 7268p at the open. The cheap pound and a potential surge in mining stocks following the positive Asian session could limit the downside, while energy stocks will likely open under pressure as the WTI traded below $51/barrel.