Miércoles Jul 24 2019 07:49
2 min
Plus ca change: A new prime minister, the same problems. Key questions remain over who he appoints to cabinet and what tack he’ll take with the EU over the coming days. A lot of the Boris factor is priced in – what’s not is an actual no-deal. If Boris does well in selling a new(ish) deal – lipstick on the pig if you like – then the pound can rally hard from here.
Sterling has been steady and didn’t look too closely at last week’s lows yesterday. Nevertheless there is yet potential for the pound to slip lower still. The arithmetic hasn’t really changed for Boris, but what has is that Tory MPs now realise they have the Brexit Party knocking. At send GBPUSD was holding around 1.2450.
Equities are firmer again – Wall Street pushed up again yesterday to move close to record highs again. SPX rose 0.68% to 3,005. Asia positive with the Nikkei up 0.4%. European shares are around the flat line but on the open we see the FTSE 100 is underperforming, slipping into the red as the rest of the main bourses were higher.
The trade outlook is a little better – or at least the news flow is onside this week – as we wait for face-to-face negotiations between the US and China to take place next week. Things can change quite quickly on this front. Markets still eyeing the ECB likely to turn very dovish tomorrow.
Oil – Brent remains anchored around $64 and WTI at $57. Reports of a second Iranian drone maybe being shot down by the US last night. API data showed a bigger draw on stocks than expected last night – US crude stocks declined 11m barrels versus the 4m expected. EIA figs today forecast for a draw of 4.2m. So some bullish news flow and data points but as ever it’s the demand side that is really important in a world that remains awash with crude – on that front we need a big turnaround in the macro data and/or a China-US trade deal. Smart money moved more net long last week of course.
Bitcoin is weaker again, slipping the $10k level and is finding support on the 50-day line around $9650. If this goes then that bearish flag formation we’ve traced looks important. Look for a possible bounce off this level though and return to $10k.
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