Morning traders' note

Whitbread up 4.6% star performer as Costa Coffee boost sales by 3.1%

18 Jun 2013, by Michael van Dulken.

Daily global markets overview with the overnight activity and what can be expected in the markets today. Information straight from the traders’ desks. Insights on commodities, equities, stocks and forex currencies.

FX/Commodities

• USD strengthening continues ahead of Fed meeting.
• US Light Crude steady at $98. Inventories data due tomorrow, speculation of a draw.
• Gold holding firm at $1380.

Equities

• Whitbread up 4.6% star performer as Costa Coffee chain helps boost sales by 3.1% year-onyear.
• Kabel Deutschland shares rise this morning as Liberty Global make a formal approach to buy them. Important because Kabel D. is the company Vodafone are looking to buy too, this could lead to a potential bidding war, and over the odds paid for K. Deutschland. Liberty are a company that Vodafone could be looking to buy if they were to sell their US assets (ie the Verizone deal). VOD shares up a penny.
• HSBA up a 1% as they are upgraded to Buy by Citigroup with a 770p target.
• RSA second best performer as Credit Suisse upgrade to Outperform with 138p target.

Overnight

• Nikkei edged down in choppy trade but managed to end above 13,000 on Tuesday. Most investors on the side lines awaiting the outcome of the U.S. Federal Reserve's meeting for clues on when it may begin tapering back stimulus.
• US equity ended the day with a large bounce (+109 points 15,179) following the previous week’s selling. Again ahead of Wednesday Fed announcement.

Morning

• Markets called flat following negative session in Asia dented by comments in FT about Fed tapering.
• Defensive helping to keep market positive: BATS, CPG, WTB, NG, with HSBC contributing the most.
• UK CPI data at 9:30 / German ZEW at 10:00 / US CPI & Housing at 13:30.
• G8 summit continuing all day.

Traders' views

Expect GBP, CAD & AUD weakness

By Ronnie Chopra

From a purchasing power point of view, Sterling above 1.50 USD seems difficult to justify and with Mark Carney taking the reins at the Bank of England from July we may already have seen Sterling's 2013 year high. Carney has been a strong advocate of more QE in the UK, which would drive Sterling sharply lower.

GBP 
Sterling’s sharp rise against the US dollar has caught many by surprise, the currency has recovered from 1.51 USD in May to the current 1.57 USD level. However, the 1.57 level is proving difficult to cross and we won’t be surprised if the USD now begins to regain some ground and take Sterling back to below 1.55 USD over the next couple of weeks.

Emerging Markets Hurt On Fears Over Reduced Liquidity/Slowing Growth

By Ishaq Siddiqi

Fears over a reduction in global liquidity as central banks scale back easing measures sends emerging markets in a rout with slowing global growth adding to the malaise.

EM’s have been the biggest beneficiaries of loose global central bank money over the years; central banks around the world have pumped in $12trillion of extra liquidity since the financial crisis of 2008, preventing a systemic risk in the market.

All asset classes seem unloved at the moment

By Ronnie Chopra

Over the last few weeks global equity prices have fallen quite sharply, the FTSE 100 has fallen from 6875 which was reached on 22nd May (only 120 points from its all -time high set in December 1999) to the current level which is just above 6300 - an 8% fall in 3 weeks.

The Dow Jones Industrial Average Index has fared better, albeit still over 300 points lower now than its recent record high. The US benchmark index hit an all-time high on May 29th at 15542. The Nikkei index has experienced > 20% fall from 16,000 to 12,500 in a matter of a few weeks but it has since bounced to just above 13,000.

How markets react to levels and zones of support and resistance

By Paul Wallace

Lets look at what creates support and resistance levels in markets, using gold as an example. Just watching these levels is a good trading strategy.

In my last piece (I feel the need, the need…to slow down) I commented on several things that traders could do to help improve their understanding of markets in an effort to improve their own trading.

Aim stock to watch: Hydrodec (HYR)

By Andrew Hore

Cleantech oil refiner Hydrodec (HYR) is set to accelerate its growth through a joint venture deal with a major US-based electricity transformer oil recovery business. A new strategic partnership with G&S Technologies will propel Aim-listed Hydrodec towards profitability and help it to scale up its US operations.

Analysts at Edison believe that Hydrodec could move into profit in 2015 and this model could form the basis of geographic expansion.

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