Indices Finish the Week in the Green

Indices Finish the Week in the Green

20 May 2016, 17:36
Roberto Jacobs

Indices Finish the Week in the Green

  • Stocks regain ground after rocky week
  • FX market likely to favour sterling and the greenback
  • Brexit and rate risks driving FTSE hesitancy

Stocks are looking to round off the week in style, as the negativity of yesterday is washed away in a sea of green. As the weekend approaches, an element of hesitancy among short term traders is driving profit taking as we head into Saturday’s G7 meeting. The problem is that while we are seeing some respite for US equity selling, there is clear evidence that we could be turning a corner, where further losses may be around the corner.

Despite the strength of the US dollar this week, is clear that traders wanting to get long sterling ahead of what is increasingly likely to be a vote to remain in the EU. With that in mind, the deterioration we have seen for EURGBP this week seems likely to persist, with sterling bulls likely to pounce on any weakness in the lead up to 23 June. Meanwhile, with the US dollar index breaking higher once more, it is increasingly evident that the dollar has turned a corner. With the Fed increasingly keen to raise rates in the summer, the June US jobs report is going to be crucial as a potential enabler for another hike.

There will be a collective sigh of relief within financial markets, as the velocity of yesterday’s selling began to paint a distressing picture for investors who are dreaming of all-time highs rather than another turn lower. However, for UK investors, the FTSE100 has been moving nowhere fast in recent weeks, as the doubt and hesitancy seen in the face of a Brexit and possible June rate hike keeps the index restrained within a 160 point range.


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