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Morning Markets Report – Wednesday 17th November 2021

Major UK stocks were unable to make headway on Tuesday with confidence undermined by increased speculation that the Bank of England would raise interest rates.

US retail sales data was stronger than expected which boosted confidence in the US outlook. US bond yields move higher following the data with a 3-week high for the 10-year yield.

Wall Street equities posted gains despite higher yields with optimism over earnings. Asian equities, however, had a negative bias on earnings reservations.

The dollar posted further gains to a fresh 16-month high on yield grounds. The Euro remained vulnerable to dovish ECB expectations, especially with coronavirus reservations.  EUR/USD retreated further to 16-month lows near 1.1260 before a tentative recovery.

The yen remained under pressure with USD/JPY at the highest level for over four years near 115.00.

Sterling posted net gains on increased speculation over a Bank of England rate hike after strong inflation data with EUR/GBP at 20-month lows.

Commodity currencies were dragged lower by the strong dollar. Oil prices were resilient, but capped by demand reservations.

Precious metals moved lower as the dollar strengthened, but with solid demand on dips. Bitcoin lost further ground with a 2-week low below $60,000.

Euro-zone equities were able to make further headway on Tuesday with underlying optimism over the earnings outlook as well as expectations of a very accommodative ECB policy.

The German DAX index posted a 0.6% advance with the Euostoxx 50 index posted a 0.35% advance to a fresh record high.

Major UK stocks were unable to make headway on Tuesday with confidence undermined by increased speculation that the Bank of England would raise interest rates. With Sterling posting gains, the FTSE 100 index declined 0.35%.

Wall Street equities were boosted by the stronger than expected retail sales data and there was further optimism over earnings trends despite inflation pressures with the S&P 500 index posting a 0.4% advance.

Trends were again mixed in Asia on Wednesday with a negative bias.

Japan’s Nikkei 225 index declined 0.4% despite dollar strength while the Australian ASX index retreated 0.65%.

China’s Shanghai index gained 0.4% with Hong Kong’s Hang Seng index 0.6% lower in late trading.

 

Stock to watch today

Direct Line Group is challenging a significant level on the daily chart. The 273p level has been tested on a number of occasions over recent months and on each previous occasion we have seen buyers push the price higher. The volume has been noticeably higher in recent sessions, this may be an indication that value hunters are moving in. If the support can continue to do a job, then we should see a turn around fairly swiftly. If the support fails, then that will negate the bullish view.

 

CCM Opinion: BUY

Buy between 273 – 277p

Stop: 269p

Target: 315p

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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