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It’s no surprise to see last week’s winners (Fresnillo; FRES and Randgold Resources; RRS) topping the UK Index again this morning. Markets remain cautious with sovereign bond yields at highs (even negative), UK Index equities have fallen back to May lows and the safe havens Silver and Gold maintain their strong rebounds. Last week’s cocktail of concerns related to global growth and Brexit failed to be countered this weekend, with China data (on investment particularly) failing to provide impetus for a sentiment turnaround and recent polls suggesting the Leave camp’s efforts continuing to pay off.
Nonetheless, the UK Index is off its lows, flirting with a 6100 breakout. With market implied odds at nigh-on zero for a Fed rate hike this week, are investors banking on a nice dovish message – similar to Yellen’s recent speech – to help soothe sentiment and deliver a rebound? Are markets calling into question Polls and Odds of a UK vote to leave the European union? Or is the index bounce simply bargain hunting at the 6050 level that has served as a floor for the index since early April. Beware RRS rolling over at April shallow falling highs. Silver often lags gold, so the FRES breakout could might have a little more in it.
Mike van Dulken, Head of Research, 13 Jun
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