"The three major US averages ended the week just about flat, as the Dollar slipped and Treasuries rose. The highly-valued tech-heavy Nasdaq once again was treated by investors the most obvious candidate for profit taking, while the broader indices made just fractional gains as focus shifted away from politics and onto prospective central bank policy following last week’s the unexpected dip in inflation and a disappointing consumer sentiment outlook reported by the trusted University of Michigan for June. Bricks and mortar retailers were in the spotlight, tumbling as traders digested the implications of Amazon’s US$13.7bn bid for American supermarket chain Whole Foods Market Inc. Energy stocks bucked the falling trend, however, on the back of a rally in oil prices after two days of declines on inventory concerns; Brent, the international crude benchmark, nevertheless still endured a weekly fall of 1.9%. Asian markets, however, have surprised this morning by starting the new week broadly firmer. The Nikkei rose 0.6% with a softer Yen aiding its move back above the 20,000 mark, while Australia’s S&P/ASX 200 sustained its recent rally and Hong Kong’s Hang Seng Index gained 1%. This comes despite the fact that a number of market-sensitive issues, including the start of formal Brexit negotiations, the decision on whether China’s domestically-traded A-shares might be included in MSCI’s widely-tracked emerging-market index along with interpretation of the latest, presumed terrorist, attack in London, remain outstanding. European indices on Friday continued to benefit from Greece’s bailout agreement and the Bloc’s weak inflation figures which, in turn, provide the ECB President, Mario Draghi, with the excuse he need to maintain a dovish stance. The reason behind this, in common with most other advanced western economies, appears to be that the broadly sustained pick-up in employment levels is not being accompanied by rising wages growth. The Stoxx Europe 600, however, rose 0.66% in anticipation of Macron securing a strong Parliamentary mandate over the weekend, which pushed the CAC40 up 0.89%, while the Xetra Dax rose by 0.48%. The UK meanwhile saw only a limited Sterling rally against the weak US$ as nervous traders instead chose to focus on the all-but-inevitable pressure that will result from current political uncertainties at what must be just about the worst time imaginable for the country. While the FTSE100 gained 0.6% on Friday, it still closed down 0.8% on the week; supermarkets were in focus, falling sharply on the Amazon news, even if Wm Morrison (MRW.L) was pointed at as another potential target for the US giant, along with Ocado (OCDO.L). Elsewhere, miners with significant South African exposure, like Anglo American (AAL.L), were knocked by news of an extension to the country’s mining charter that proposes increased powers for black empowerment groups. There are no scheduled macro releases from the UK today, although the media will be closely following Michel Barnier and David Davis, the chief negotiators for the EU and UK, as they begin Brexit discusions despite the Conservative government’s failure to secure a parliamentary majority. The two leading issues to be dealt first are the financial settlement of the UK’s outstanding account, which has been put at as much as €100bn, and continuing rights of approximately 3m EU nationals this side of the Channel. The EU is expected to provide April Construction Output figures, while the US is only scheduled to convey speeches by the Fed’s William Dudley and Charles Evans. UK corporates expected to release earnings or trading statements are today limited to Bonmarche Holdings (BON.L) and CareTech (CTH.L). The resilience of US equities and the firm start to the week seen in the Far East appear set to provide European equities with a confident opening this morning which will shared by London despite traders remaining highly cautious of current proceedings. The FTSE-100 is seen rising as much as 60 point in early business."
– Barry Gibb, Research Analyst
The FTSE-100 finished Friday’s session 0.60% higher at 7,463.54 whilst the FTSE AIM All-Share index was up 0.94% at 971.38. In continental Europe, the CAC-40 finished up 0.89% at 5,263.31 whilst the DAX finished 0.48% higher at 12,752.73.
In New York on Friday, the Dow Jones rose 0.11% to 21,384.30, the S&P 500 added 0.03% to stand at 2,433.15 and the Nasdaq shed 0.22% to finish at 6,151.76.
In Asian markets this morning, the Nikkei 225 had risen 0.59% to 20,060.60, while the Hang Seng rose 0.99% to 25,879.24.
In early trade today, WTI crude was down 0.31% to $44.60/bbl and Brent was down 0.27% to $47.24/bbl.
Brexit negotiations begin: David Davis targets ‘historic’ deal
Brexit Secretary David Davis will call for “a deal like no other in history” as he heads into talks with the EU. Subjects for the negotiations, which officially start in Brussels later, include the status of expats, the UK’s “divorce bill” and the Northern Ireland border. Mr Davis said there was a “long road ahead” but predicted a “deep and special partnership”. The UK is set to leave the EU by the end of March 2019.
Source: BBC News
Click here to see all this week’s planned corporate and economic announcements.
During the three months to end-May 2017, the number of stocks on which Beaufort Securities published recommendations was 196, and the recommendations were as follows: Buy – 77; Speculative Buy – 100; Hold – 17; Sell – 2.
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