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Morning Markets Report – Wednesday 20th October 2021

Major UK stocks drew support from global gains and strength in commodity prices.

Inflation and central bank responses continued to dominate markets on Tuesday. US and global bond yields move higher amid less confidence that higher inflation would be transitory.

Risk appetite was underpinned by expectations of reflation trades with global bourses at a 1-month high. Wall Street equities also posted limited net gains.

The dollar lost ground, especially with a lack of defensive demand, but did recover from 3-week lows.

Oil prices were again underpinned by expectations of robust demand and supply shortages. Gold advanced, but failed to hold peak levels as the dollar recovered some ground. Bitcoin posted fresh 6-month highs and traded close to record highs.

Euro-zone equities were underpinned by solid global risk conditions and hopes for supportive ECB financing conditions. There was, however, net disappointment over the earnings data which limited support.

The German DAX index gained 0.25% with a 0.35% advance for the Eurostoxx 50 index.

Major UK stocks drew support from global gains and strength in commodity prices. There were, however, headwinds from Sterling gains and strong expectations of a near-term rate hike with the FTSE 100 index advance held to 0.2%.

Wall Street traders were continuing to monitor inflation developments and the impact of elevated energy prices. Underlying concerns and the impact of higher yields were offset by favourable earnings trends and the S&P 500 index gained 0.7%.

Sentiment held steady in Asia, but with a lack of traction in markets.

Japan’s Nikkei 225 index edged higher with a weak yen limiting selling with a 0.5% advance for the Australian ASX index.

China’s Shanghai index traded marginally higher in late trading with a 1.1% advance for Hong Kong’s Hang Seng index.

 

Stock to watch today

 

Direct Line Group has been trading in a well defined range for a number of months. The latest pullback to the lower end of the range appears to have been met with strong buying interest. The shares posted a bullish engulfing candle yesterday, which was accompanied by strong volume. The risk/reward from here is very attractive, targeting a move to the upper end of the range.

 

CCM Opinion: BUY

Buy between 282 – 288p

Stop: 272p

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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