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What a week for the UK’s UK 100 , and indeed many of the major global indices. But what was the catalyst for broad based rally we’ve seen? To start off, we’re again looking at two of perhaps the most familiar market drivers, which is great for you – here have been no black swans this week! In fact there’ve been one or two signs of a healthy stock market.
First, it’s the return of the US Dollar to the field. It’s always there, sure, but we now suddenly find ourselves facing the prospect of a June US interest rate hike. As the data has continued to impress, that’s looked ever more possible on the outside (but not so much on the inside), and a resultant stronger US Dollar has had a significant impact on Gold which is now back around a significant level of support at $1210 – that’s more or less a $90 fall from the April highs.
Which brings us on to the second driver: Brexit. Considering all the rampant scaremongering that’s been going on, have you made up your mind about where you stand? More importantly I guess, do you think it’ll happen? The likelihood is coming down every day.
Brexit is not only cited as an explicit risk to the UK’s economy, it’s also on the US Fed’s list of arguments against hiking rates in June. And what makes a June hike even more unlikely is the fact the Fed is due to meet 1 week before the UK’s Brexit vote! Can’t it just wait until July? Clearly, it can. Of course, we have had a number of hawkish Fed members speaking of late, but did your broker bother to tell you that they were nearly all non-voters? Non-voters don’t vote. So their opinion doesn’t count where it matters.
It’s the subtle details such as this, expertly broken down by our research team, that are helping our clients make the most of the current market conditions. Quite frankly, we’re looking at the prospect of rallies in equities, indices and commodities in the coming weeks – a rare situation providing opportunities for everyone.
Keep yourself in the loop by letting us do it for you! Access our daily research and trade ideas here now.
Joe Nguyen, Trader (27 May)
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