European equities are set to sprint out of the starting blocks as the Scottish Independence attempt flounders.
Clients had spent yesterday steadily building up long positions in sterling and the FTSE 100 as they bet that cooler heads would prevail and the union would remain in tact.
As the first few results came in in-favour of the No campaign, there was a jubilant surge in sterling and FTSE futures.
As the No campaign began to pull away though, the media kept showing cringe worthy pictures of Nicola Sturgeon trying to put on a brave face, as she cheered on the token victories for the Yes campaign.
At the time of writing, the markets have levelled off a little.
The old market adage of 'buy the rumour sell the fact' may still hold though. If you're leaving it to this morning to buy on post referendum euphoria you may be getting in at the top.
With such a major source of uncertainty out of the way, it's back to the boring economic fundamentals.
This is clearly a shame as it's unlikely that we'll see another political issue which compels such esteemed public figures as Barack Obama and SuBo come together to imbue the public with their opinions.
Stock Market Trading
: 18 September 2014
Scottish Independence Day?
European equities are set to take their cue from the US markets and open higher.
After an initial spasm, US equities finished in the green as Yellen kept the "considerable time" phrase in the FOMC statement. European equities are set to adjust for this before hunkering down and seeing how the Scottish Independence vote pans out.
Despite the jubilant reaction from equities traders though, the forex, commodities and bonds traders took the whole FOMC statement as hawkish. They subsequently sold commodities, sold bonds and bought dollars.
Cleary someone is fundamentally wrong in their analysis and I'm sure once the uncertainty of the Scottish vote is out the way, this anomaly will be ironed out.
The Fed's statement pointed out that the US economy is expanding at a decent pace amid low inflation.
It was added that there's room for recovery in the labour market and that asset purchasing is to be completed in October.
The Dow briefly rose but retraced shortly after. Nonetheless it ended 35 points up at 17,176.
With the fate of the UK in the hands of 5 million Scots, not much action is expected from the markets today. It will be wholly acceptable for traders to sit back and watch the (financial) telly.
Stock Market Trading
: 17 September 2014
European equities are set to start on a firm footing on speculation that the Fed will keep its dovish stance.
Markets have been on edge lately and bracing themselves for the implied nod that the beginning of the interest rate hike cycle has a start date.
Although analysts have been slanting the odds in favour of the Fed removing the phrase "considerable amount of time" from its statement tomorrow, the Wall Street Journal's Hilsenrath triggered a rush of risk-on buying as he suggested that the key phrase would remain.
We may never know whether or not Hilsenrath's a very good guesser or if he's been having the odd moonlit rendezvous with Fed members. However, it seems that his insight was good enough for equities traders to go ahead and take the plunge.
Reports that China's central bank will provide over $81bn of liquidity to the country's five biggest banks, in an attempt to bolster economic growth, have sparked a sharp rally in global equities.
The feel good effect also pushed the Dow Jones 107 points higher to 17,143.
Additional support was offered by rising oil prices which in turn triggered a rally in energy stocks.
Stock Market Trading
: 15 September 2014
European equities are set to slump on the open following weak data from China that came out over the weekend.
As if traders didn't have enough to contend with this week, what with the Scottish Referendum and the FOMC meeting, China has flapped its hands in the air to remind everyone that they are facing an abrupt slowdown.
With positive cues evaporating, and uncertainty stacking up, it's only natural that risk aversion is setting in early this week.
Last week in the US, retail sales rose at a faster than estimated pace and consumer confidence also climbed higher than initially predicted.
However, the Dow Jones dropped 69 points to 16,991 as investors were quick to speculate the Fed might now be tempted to hike interest rates sooner than anticipated.
The US central bank's meeting later this week will probably bring new details on what 'considerable period of time' means.
The information and comments provided herein under no circumstances are to be considered an offer or solicitation to invest and nothing herein should be construed as investment advice. The information provided is believed to be accurate at the date the information is produced.
By Jonathan Sudaria, 19 September 2014
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