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XTB TRADEBEAT

Mixed start for stocks as Oil pares early gains

Summary:

  • Mixed start for stocks with UK100 falling, DE30 flat and US500 rising
  • GBP appreciation weighing on the UK100
  • Eurozone manufacturing PMI hits highest ever level
  • Oil begins to slip after strong start
  • GDT auction result: +2.2%. Largest rise in 6 months
  • Gold hits highest level since September
  • Latest COT data reveals potential contrarian trades

Stock indices have gotten off to a mixed start to the New Year with the UK100 being hit with some selling and slipping back after ending 2017 at a record high. The DE30 has been pretty volatile with a gap higher being met with a wave of selling before the market recovered into the cash close to trade pretty much flat on the day. A technical overview of the DE30 can be found here. US markets continue to be the frontrunners with the US500 gaining around half a percent to trade not far from its all-time high. 

One of the reasons for the UK100 lagging its peers has been a fairly steady gain in the pound. Sterling has been appreciating today despite an earlier miss in the UK manufacturing PMI which came in at 56.3 against consensus forecasts of 58.0. The Eurozone PMIs continue to impress with the final reading for December coming in at 60.6 - the highest level since records began in 1997. 

The New Year began in a bullish way for oil markets with Brent Oil reaching its highest level since the summer of 2015 amidst large anti-government rallies in Iran and ongoing supply cuts led by OPEC and Russia. The market is now in the vicinity of the peak seen during 2015 around the $66-69 a barrel region and any reversal signals here could provide attractive short opportunities. However, after the bright start there has been some notable selling back and price is now in the red on the day.

The fortnightly GDT auction results have shown a strong rise with the price index higher by 2.2% on the prior reading. This is the largest increase in quite some time with recent months being characterised by several notable declines. The New Zealand dollar is typically the most sensitive currency to the GDT auction results and the strong number could offer some support to the Kiwi.

Gold has risen once more today with the market higher by around 0.8% by the European close. The price has continued the rally seen since its December low and you have to go all the way back to mid-September to find higher prices. In fact the market is higher on the day for the 8th time in a row which is the longest winning streak for this asset since 2011.

 As the 2018 has begun we revisit the CFTC data on positioning to inspect which markets look overbought or oversold. We analyze positioning of non-commercial traders that typically open their positions for speculative purposes.

 

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