Markets in Europe, the UK and the US were all in the red today despite promising starts for the UK and Europe. The FTSE 100 opened strongly but dropped back over 1% from intraday highs to close down -0.4%: the FSTE 250 reversed a similar strong gain to close down over 1% firmly testing and rejecting its 200MA. Burford’s ongoing short selling saga weighed on the AIM 100 as BUR sold-off over 11% - arguably because rather than in spite of its RNS regarding alleged HFT tactics to spoof the share price down. It is unlikely that the share price will recover unless BUR initiates its promised buyback programme or another catalyst helps improve sentiment.
Of the sectors performing well today there was a distinct defensive nature to the gainers with Electricity, Beverages, Personal Goods and Household Goods all in the green: the spectre of recession may well be influencing positioning towards the more recession proof sectors . By contrast, Banks, FS and Industrial Engineering all closed won over 1%
Brent crude gained 0.5% while gold continued to consolidate around the $1500 level and looks set to move north. A break above the $1510 level will likely lead to new 2019 and multiyear highs. Copper and iron ore remained weak reflecting the ongoing trade concerns.
In currencies, GBP gained 0.4% against USD but remains very weak at $1.208: the likelihood of rechecking the $1.19 level reached post the 2016 referendum seems highly likely in the coming weeks. The Yuan continues to devalue against USD as China looks to offset US trade tariffs by devaluing their currency by similar amount. A continued strong USD will negatively impact US stocks which in turn will sour global sentiment.
In sentiment, VIX remains elevated with the US VIX around 19.5 while the Fear & Greed Index remains at 27 (Fear). Of the 1404 UK stocks monitored, 316 fell, 235 rose while 853 remained unchanged