FTSE +10 points at 7348
DAX -65 points at 11564
CAC -32 points at 4890
Euro Stoxx -20 points at 3304
The week started with limited risk appetite. The US dollar gained against the majority of the G10 currencies, except the yen (+0.46%).
Japan announced to sell up to 1.4 trillion yen additional Japan Post (T:7182) shares. News triggered a 4.9% sell-off in Tokyo.
Nikkei (-1.00%) traded down to a two-week low on stronger yen. Topix (-0.92%) joined the sell-off.
The net speculative short positions in yen futures decreased for the first time since October, as the US 10-year yields traded below 2.40% and the futures hinted at a further deterioration in US yields. The USD/JPY plunged to 113.86, the MACD turned bearish for the first time since the beginning of October 2016. Breaking below the 113.75 (January 11th low) could encourage a deeper sell-off toward the critical 111.95 (major 38.2% retracement on Nov 8th to Dec 14th rally).
Gold traded at $1208, as money flew into the safe heaven markets. Silver gained 0.56%.
Australian mining stocks (+1.56%) outperformed, as iron ore rallied 7.22%.
WTI crude oil held ground above $52 per barrel, yet the broad-based appreciation in the US dollar weigh on oil prices. Copper March futures eased 0.26%.
The pound (-1.25%) has been the biggest loser against the greenback, amid Sunday Times reported that the UK Prime Minister Theresa May would seek a Hard Brexit on her speech Tuesday. Basically, May would consider leaving the European Union’s single market as part of her Brexit strategy in order to fight against immigration. From a market perspective, the Hard Brexit means a smoggy future for the UK’s businesses across the Channel.
The pound markets are pricing in a potentially business unfriendly speech from Theresa May. Cable hit 1.1986 in Asia, while the EUR/GBP jumped to 0.88541 soon after the weekly opening bell. Traders remain seller on the pound, as downside risks prevail. A Hard Brexit rhetoric could send the GBP/USD down to October 7th flash crash lows (1.1825) and encourage a further rise in the euro’s value toward the 0.90 level last seen on November 8th, before the US presidential election.
The FTSE futures (+0.23%) outperformed its European peers, while the DAX and the CAC futures made a sluggish start to the week.
The FTSE rolling index traded at a fresh all-time high of 7355.75p, given that the UK’s big caps’ international business revenues increase on the back of a notably cheaper pound. Hence, investors continue rushing into the UK shares. New record could well be on the menu of the day.
The FTSE 100 is called 10 points higher at 7348p at the open.
The US will be closed due to Martin Luther King Day.