Rundown: ECB Taper Talk This Week?
London Capital Group | Apr 25, 2017 16:07
Macron is no knight in shining armour
Excitement over the success of Emmanuel Macron (or rather the failure of Marine Le Pen) in the first round of the French elections died down on Tuesday. The CAC 40 held Monday’s gains and French yield spreads over Germany continue to tighten to reflect the greater European political certainty.
Get The App
Get The App
A Macron presidency avoids the immediate threat of Frexit but he is unlikely to be France’s knight in shining armour. Without an established party behind him, Macron may find victory in parliamentary elections in June harder to come by. Without enough seats in the National Assembly, structural reforms needed to put France’s economy in a position for long term sustainable growth will be as hard to come by for Macron as they were for Hollande. Still, the implementation of economic reform is probably more an issue for France than a headwind to global markets.
Get The App
Get The App
A dip-buyer’s market
Get The App
The dip-buying frenzy that now happens after every geopolitical shock is seeing some profit-taking. It’s quite amazing to behold the same dip-buying strategy applied whether the geopolitical shock happens (Brexit, Trump) or it doesn’t (French election). Even if there had been a Le Pen - Mélenchon final round, markets probably would have bought the dip anyway. The ECB would have been there to limit the damage with extra liquidity.
Get The App
Get The App
Whitbread earnings Costa FTSE some gains
Get The App
The FTSE 100 received an afternoon boost from a positive open on Wall Street. Bank and insurance shares as well as the US-orientated Ashtead Group PLC (LON:AHT) were amongst the top risers while Costa Coffee owner Whitbread (LON:WTB) was a drag. Whitbread’s warning of a tougher consumer environment hit a nerve and its shares got punished. Data shows the post-Brexit spending spree has noticeably slowed in the first quarter so the warning was heeded by investors despite Whitbread results that beat expectations.
Get The App
Get The App
CAT: He was a beautiful butterfly!
Get The App
After years of disappointment, Caterpillar (NYSE:CAT) earnings sprung to life. Caterpillar cut its 2017 guidance but it crushed first quarter profit expectations so investors are encouraged by the recovery story. CAT is known as a bellwether for global growth so for it to beat expectations so convincingly was a green light for investors. Caterpillar’s business was heavily impacted by the oil and mining industry slump but shares have been rising on the hopes of an infrastructure spending boom in the States under President Donald Trump.
Get The App
Get The App
ECB taper talk this week?
Get The App
Chatter that Macron entering the final round of the French election has eased fears amongst central bankers and may lead to a ‘tweak’ in the ECB’s policy language sent EUR/USD spiking back above 1.09. The comment came from anonymous sources but is in line with our long-held view that above-target eurozone inflation necessitates the discussion of tapering much earlier than previous guidance. Were the ECB to actually signal an earlier than expected end to its asset purchase program at its policy meeting on Thursday, the euro could be in for its biggest two-week gain in years.
Get The App
Get The App
Disclaimer: The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced. Losses can exceed deposits.
Get The App
Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.