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Morning Markets Report – Friday 7th January 2022

Major UK stocks dipped sharply on Thursday with the global risk tone more vulnerable.

Risk conditions were calmer on Thursday, but still brittle as markets continued to focus on potential Fed tightening. US bond yields continued to move higher with the 10-year yield at 9-month highs.

Markets were uneasy over near-term coronavirus developments, especially in China.

Wall Street equities were little changed with a further net retreat for the Nasdaq index. Asian equities secured limited gains with caution ahead of the US jobs data.

The dollar held firm on yield grounds, but failed to extend gains. EUR/USD settled close to 1.1300 with short covering providing an element of support. Sterling held a firm overall tone on Bank of England tightening expectations with EUR/GBP close to 22-month lows.

The Australian dollar recovered only slightly from intra-day lows with cautious sentiment. The Canadian dollar secured a measured net gain amid strong trade data and gains in oil prices.

Oil prices were resilient despite fragile risk conditions, underpinned by short-term supply outages.  Precious metals declined sharply as bond yields moved higher. Cryptocurrencies remained under pressure as bitcoin hit a 3-month low.

Euro-zone equities opened sharply lower following overnight losses on Wall Street and were unable to regain significant ground as risk appetite remained more fragile.

The German DAX index declined 1.35% with a 1.5% retreat for the Eurostoxx 50 index.

Major UK stocks dipped sharply on Thursday with the global risk tone more vulnerable. There were also reservations over the potential for higher interest rates in the UK which sapped support and the FTSE 100 index declined 0.9%.

Wall Street sentiment remained brittle on Thursday with further concerns over the impact of higher yields and potential Fed tightening, although selling was contained. There were further limited losses in the tech sector with the S&P 500 index closing 0.1% lower.

US futures edged higher on Friday with Asian bourses overall in positive territory, but with fragile overall confidence.

Japan’s Nikkei 225 index closed marginally lower with a 1.3% gain for the Australian ASX index.

China’s Shanghai index traded 0.2% lower with Hong Kong’s Hang Seng index 1.5% higher in late trading.

 

 

Stock to watch today

Babcock continues to trade within a bullish channel formation on the daily chat. In recent sessions we have seen the shares break out of the wedge pattern and simultaneously move above horizontal resistance at 329.8p. The shares were one of the largest risers on the session yesterday and look set to continue higher from here in the short to medium term.

CCM Opinion: BUY

Buy between 325 – 340p

Stop: 293p

Target: 408p

The value of shares can fall as well as rise; you may not get back the amount you invested. Past performance is no guarantee of future performance. Capital is invested at risk This document is published by Clear Capital Markets and does not constitute a solicitation or personal recommendation for the purchase or sale of investment. The investments referred to may not be suitable for all investors. Any data or views given should not be construed as investment advice. Every effort is made to ensure the accuracy of the information, but no assurance or warranties are given. Clear Capital Markets Limited is authorised and regulated by the Financial Conduct Authority FRN 706689.

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