U.S. Markets Hit New Records As Earnings Season Gets Underway

U.S. Markets Hit New Records As Earnings Season Gets Underway

CMC Markets  | Jan 12, 2018 16:32

Europe

The FTSE 100 posted yet another all-time high, it appears the British index is following in the footsteps of the American markets. One notable difference the FTSE and the US indices is the London market is making relatively small strides higher, which suggest a canned excitement.

GKN (LON:GKN) has added by far the most points onto the FTSE 100 today after the company’s’ share price rocketed when it disclosed it rejected a takeover approach from Melrose (LON:MRON). GKN felt the Melrose proposal undervalued the company, and this stock reached a record-high today.

The political mood is Germany is on the rise Angela Merkel’s Christian Democratic Union (CDU) party reached an agreement with the Social Democrats, which will pave the way for negotiations to begin. This could bring about the possibility of a coalition being formed, and dealers are slightly more optimistic because of it.

The rally in the euro has dented the DAX and CAC 40 earlier in the session but the markets have swung back to positive territory. The single currency has been assisted by the political news in Germany, while the hawkish minutes from the European Central Bank yesterday are playing into it too.

Bovis Homes (LON:BVS) shares are up 1.6% after the company achieved its terms of completions, and the average selling price rose by 7%. Forward sales for nest year are strong and the company is optimistic and future profitability.

US

US markets are still enjoying their bullish run as it is another round of record highs for the Dow Jones, S&P 500 and the Nasdaq 100, as mediocre economic indicators and positive earnings adds to the bullish sentiment.

The headline inflation rate in the US dropped back to 2.1% in December from 2.2% in November. The report came one day after the headline PPI rate fell to 2.6% from 3.1%. These figures will help erode some of the fear surrounding further interest rate hikes from the Federal Reserve.

JPMorgan (NYSE:JPM) and Wells Fargo (NYSE:WFC) both topped expectations on earnings per share (EPS), but fell short of the revenue estimates that analysts predicted.

JPMorgan saw bond trading revenue fall by 27% - which has been a common theme on Wall Street in recent reporting seasons.

BlackRock (NYSE:BLK) is the best of the bunch as it exceeded EPS, revenue and total assets under management (AuM) forecasts. The asset manager also raised its dividend by 15%. The stock hit an all-time high today on the back of the figures.

FX

EUR/USD jumped to its highest level in three years as the improving political sentiment in Germany and the upbeat comments from the ECB yesterday are fuelling the rally. The political discussions in Germany may lead to the formation of a coalition government, and though we are a long away off from that, dealers welcomed the news. Yesterday the ECB suggested their loose monetary policy may not last as long as investors suspected they would.

GBP/USD hit its highest level since the EU referendum as the US dollar continues to drive lower. There has been not major economic announcements from the UK today, so this was down to weakness in the US dollar. The underwhelming PPI figures from the US yesterday and the cooling of the CPI figures today weighed on the greenback. The pound has been in an upward trend since March, and if it continues it could target 1.4000.

Commodities

Gold has hit a four month high on the back of the weakness in the US dollar. The metal have been pushing higher for the past month ,and the slight decline in US CPI was welcome by the gold bugs as it makes the Federal Reserve less likely to hike interest rates. Some dealers are pencilling in three interest rate hikes this year, but in light of the US data in the past two, some are not so sure.

Brent Crude and WTI are slightly lower today as trader locked in their profits. Yesterday, Brent Crude traded above $70 per barrel for the first time since November 2014, and now it has dipped below that level.

The commitment of traders report from the commodity futures trading commission (CFTC) showed that positions be speculators on Brent Crude have reached a record high, and this could be an indication the market is over heated.

DISCLAIMER: CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed.

No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.

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