Market News & Analysis

Top Story

Risk on as trade truce celebrations continue

An upbeat start to December was more than evident in today’s session following the weekend’s trade war truce.  Investors were quick to put risk back on the table jumping into equities whilst flows out of safe havens were on the increase.   The FTSE jumped to a high of 7145 in early trade as oil & mining stocks traced commodity prices higher. This combined with a weaker pound and a stronger start on Wall Street ensured the FTSE was still up over 1.5% heading into the close.

Oil rebounds after heavy losses in November
Oil rallied over 5% on the trade truce and expected oil cuts. With the trade truce expected to keep demand expectations stable and the OPEC meeting set to reduce supply, this week looks set to be a win win for oil. The growing trade tensions between the worlds two biggest economies had weighed heavily on global trade and sparked fears of a global slowdown in growth, which hit sentiment for oil. Furthermore, oil was on the list of products facing import tariffs meaning its outlook had been bleak. After diving 20% in dismal November trading, the bulls are back, at least for now. Looking ahead to the OPEC meeting later this week, the market is starting to price in a substantial production cut as Russia affirmed continued cooperation with Saudi Arabia.

GSK dives on Tesaro deal
Despite the celebratory mood, investor goodwill failed to spread to GSK. GSK dived as investors reacted to GSK’s Tesaro deal. GSK agreed to buy Tesaro for $5.1 billion. This 60% premium to Tesaro’s closing price on Friday, proved too much for investors to stomach and sent GSK tumbling over 6%. GSK has previously sat on the side-lines as rivals engaged in deal making, a situation current Chief Executive Emma Walmsely is keen to change. However, her enthusiasm is clearly not share with shareholders. 

Sterling’s struggles continue
GBP/USD was ignoring dollar weakness and fell lower, as Brexit uncertainty overshadowed the risk on sentiment evident in every other corner of the market. The pound tumbled across the session, not even perked up by significantly better than forecast manufacturing activity data.

The manufacturing pmi jumped to 53.1 in November, up from 51.1 in October and significantly ahead of the 51.7 expected. However, delving deeper into the numbers, the jump is owing to an increase in domestic orders. This raises the question of how much of this is actually down to Brexit? With the probability of a no deal Brexit seemingly increasing by the day, stockpiling by firms could well be on the increase; a phenomenon that we expect to see more signs of as more firms initiate contingency plans.


Disclaimer

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

GAIN Capital Singapore Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the GAIN Capital group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), GAIN Capital Singapore Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact GAIN Capital Singapore Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither GAIN Capital Singapore Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

GAIN Capital Singapore Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit cityindex.com.sg for the complete Risk Disclosure Statement.

Important Notice:

Cryptocurrencies are not legal tender currency and trading of derivatives on Cryptocurrencies are currently not covered under any regulatory regime in Singapore. Consequently, investors should be aware they do not have protection under the Securities and Futures Act (Cap. 289). Please ensure that you are fully aware of the risks.