Article / 02 March 2017 at 12:33 GMT

Mid-session Europe: Stocks waver after rally

Saxo Markets


Foreign exchange

Stocks across Europe wavered on Thursday after rallying on Wednesday when investors saw the prospect of gains for European companies from a boost in US fiscal spending. 

The US dollar was stronger across the board.

Hawkish remarks overnight from Federal Reserve board of governors member Lael Brainard (a dove and voter) helped keep the recent USD firm tone intact. 

The Eurozone's February advance CPI estimate showing a 2.0% year-on-year rise and core CPI at 0.9% y/y were in line with expectations.

Snap Inc, the parent company of social media app Snapchat, is listing on the New York Stock Exchange today under the ticker SNAP:xnys. Its initial public offering priced at $17.00 a share, and limit orders can now be placed on your trading platform. 

  • US: Initial jobless claims (245k exp.) (1330 GMT)
  • Canada: December GDP (1.7% exp.) (1330)
Forex developments

It's been a dollar-dominated day, with USD stronger across the board as eyes shift to a March 15 US rate hike as even Fed doves emit hawkish tones.

GBP closed yesterday slightly below the 61% Fibonacci level in the 1.2294 area from the rally of January 16 to highs of February 2. This level acts as technical resistances at moment and opens to 1.2200 where GBPUSD found decent support back in the last weeks of December. The UK has had some softer data releases lately, which could attract increasing attention with tomorrow's services PMI as another test. So far GBPUSD weakness stems mostly from USD strength. EURGBP is caught between the 100-day moving average at 0.8607 and 55-day moving average at 0.8546.

EURUSD is under pressure and dancing on the 61% Fibonacci level at around 1.0528 (from the rally starting in early January to February 2), which it has done several times since February 15, but failed since then to close below this level. We take note of such a close below 1.0528, which opens to the 1.0456 area. On the top side, 1.0585 is technical resistance of note, which is the 50% Fibo level.

USDJPY is approaching key technical levels, first at 114.65 (55-day moving average) and then more importantly 115.00, which was the defining area both on the break higher after the Trump rally and also on the USD retreat in early January. The 114.30 area is the 38% Fibo level from the highs of January to lows of early February; if we close above that on the day, it could give a good foundation to target more important key levels at 115.00 and 115.12, which is the 50% Fibo level from the same move.

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Stocks across Europe wavered on Thursday after rallying on Wednesday when investors saw the prospect of gains for European companies from a boost in US fiscal spending. Germany's Dax 30 index, France's Cac 40 index and London's FTSE are trading flat, while Spain's Ibex is down 0.3%. Consumer goods, telecom and technology sectors weighed on indices, while healthcare, utility and oil and gas shares rose.

On the mover’s list, Roche Holding pushed up 5.3% after the Swiss pharmaceutical heavyweight logged positive clinical trial results for a drug to treat early-stage breast cancer.

Anheuser-Busch fell 2.4% after the brewer of Stella Artois and Budweiser reported weaker-than-expected earnings. The company raised its target for cost cuts in its merger with rival SABMiller.
Travis Perkins slid 7.5% after the UK building-products supplier posted a 67% drop in 2016 pretax profit on restructuring costs.

LafargeHolcim picked up 3.8% after the world’s largest building-materials supplier by sales swung to a yearly profit, helped by cost-cutting. 

Capita PLC shares tumbled 7.7%. The outsourcing services provider said chief executive Andy Parker will step down later this year as it reported a fall in full-year net profit. The shares are scheduled to exit the FTSE 100 this month.

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Mid-session Europe is part of TradingFloor's stable of commentary running through from the US close, through Asia to the European session. Click below to keep abreast of all the developments as they happen.

The Matterhorn
The Matterhorn, elevation 4,478 metres (14,692 ft). The air is getting thin with the 
Dow above 21,000 points.

— Edited by John Acher

The Global sales Trading desk is a multi-asset team providing customised trading solutions


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