UK GDP for Q2 2019 came in slightly better than expected at 0.3% but shows slowing in the UK economy: services and production advanced while construction was flat . Retail and IT showed strength while car production had a partial recovery over Q1 (ONS release).
The GDP beats seems to have helped the flagging pound which rallied 0.4% on the day and made a double bottom with the late Dec ‘18 lows. This may signal an inversion. It is more likely that Fed Powell’s statement on rate cuts in the US was the main driving force as USD weakened and gold broke-out north gaining $17 in minutes following the Fed release
As highlighted yesterday, AIM did finally catch a bid and rallied today with both the 100 and All-Share outperforming the other indices and the AIM 100 up almost 1%. A quick look at performance across the board for the UK markets shows AIM lagging the major indices on a relative strength basis. (relative strength and price plots are available in the UK Markets Report here: these allow rapid intercomparison of multiple markets on one plot ). Many of the AIM big caps were in the green with FEVR up almost 6% , HCM 5%, PRSM 3% and both BOO and ASC over 2%
Oil was boosted by a sharp drop in Wednesday’s EIA crude inventory stocks : this lifted Brent to above $66 and 10% above the mid-June lows. This is positive both the oilers and the oil and gas service companies which will react favourably to the sustained uptick. O&G Services are up 2.9% on the day As highlighted a couple of weeks ago following a results update, Wood Group is up over 20% boosted further by both improving oil prices and shorters unwinding the almost 11% open interest on the name. Current short interest is still 9.65%, which will make price action interesting
In sentiment, VFTSE data is currently unavailable since end of June contracts. The US VIX and European VIX show little change with both around the 13 level. The FTSE 100 remains the most bullish UK index with over 70% of its constituents bullish while the FTSE 250 is 63% bullish and the AIM All Share only 41% bullish