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Morning Markets Report – Thursday 6th January 2022

Major UK stocks posted further gains on Wednesday with strength in commodities and positive sentiment towards the UK market.

Risk conditions were relatively calm in European trading on Wednesday. Fed minutes were relatively hawkish which triggered increased expectations of an early rate hike in March.

US bond yields moved higher with the 10-year yield at the highest level since March 2021.

Risk appetite deteriorated sharply, especially with reservations over Chinese coronavirus developments.

Wall Street equities posted significant losses with sharp selling in the tech sector. Asian bourses also lost ground during Thursday, although Chinese stocks were resilient.

The dollar reversed losses after the Fed minutes, although gains were limited against low-yield units.

EUR/USD settled just below 1.1300 with an element of defensive Euro support. Sterling posted a firm overall tone despite weaker risk conditions with GBP/USD holding above 1.3500 after touching 8-week highs.

Commodity currencies retreated sharply after the Fed minutes and remained vulnerable on Thursday with sharp losses. Oil prices surrendered gains after the Fed minutes, but with buying on dips. Precious metals also reversed gains to post net losses as bond yields moved higher.

Cryptocurrencies also dipped as risk conditions dominated with bitcoin posting 1-month lows.

Euro-zone equities secured further gains on Wednesday as investors continued to look through near-term Omicron disruption. There was also some evidence that institutional investors were increasing European allocations compared to the US.

Major UK stocks posted further gains on Wednesday with strength in commodities and positive sentiment towards the UK market. Sterling gains limited support and the FTSE 100 index gained 0.15%.

Wall Street equities edged lower into the European close and then dipped sharply after the Fed minutes amid concerns over a more aggressive move to increase interest rates. There was heavy selling in the Nasdaq index and the S&P 500 index declined 1.9%.

US futures retreated further on Thursday and Asian markets remained on the defensive.

Japan’s Nikkei 225 index declined 2.9% with a 2.7% slide for the Australian ASX index.

China’s Shanghai index was resilient with a 0.25% decline with Hong Kong’s Hang Seng index 0.25% higher in late trading.

 

Stock to watch today

M&G PLC appears to have turned a corner on the charts. The shares broke out of a wedge pattern on the 23rd December 2021 before moving higher to take out horizontal resistance at 204.9p. In yesterday’s session we saw a small pullback to retest the new support, this should provide an ideal entry from a technical perspective. Higher prices are expected from here over the short to medium term.

CCM Opinion: BUY

Buy between 200 – 205p

Stop: 195p

Target: 229p

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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