UK Market Narrative Tues 15 Jan 2019: UK Markets in the Green Again

Despite the Brexit uncertainty hanging over markets in advance of the UK Parliamentary “Meaningful Vote” this evening, UK markets betrayed little sings of much concern today. Indeed, the VFTSE fear index dropped back to 16, a level not seen since early Dec. While the domestically focused MCIX and AIM were flat or negative, the NMX and UKX both rallied around 0.5% aided in the main by a slip in GBP as worries about the political implications of the UK government weighing on the currency. Attempts at reassurance from the EU on mitigations may well have soothed some of the uncertainty and favoured more exposure to UK domiciled international names.

Outperforming sectors included A&D +2%, Software +1.5% with Pharm, Personal Goods and Beverages all rallying 1% or more

Underperforming sectors included Industrial Transport, REITS and Mobile.

Oil rallied almost 1.5% to above the $60 mark. In metals, gold was down 0.3% while copper rallied +0.25% with iron ore flat.

UK Market Narrative Mon 14 Jan 19: Markets Await a Meaningful Outcome?

UK Markets took a breather today and pulled-back with the NMX losing 0.9%, the MCIX down 0.7%, AIM 100 also down 0.7% while the TechMARK lost -1.7%. Tomorrow’s meaningful vote on the Brexit exit plan may well be weighing on sentiment today with traders going flat in advance of a binary event. On a brighter note, the NMX, MCIX, AIM1 and UKX all remain above their 8 and 21EMAs which suggest that the short-term reversal in trend remains in play. The VFTSE rose just 10% today and remains around 18 suggesting market participants are sanguine on risk at the moment. Finally, the ultimate canary in the Brexit coal mine, GBP rallied over 0.3% against USD and is hitting levels not seen in 3 months.

In sectors, todays winners were Tech Hardware +2.3% with Forestry , F&D Retail and REITS and Industrial metals all marginally in the green. Today’s big losers were Pharm (-2.8% led by AZN) with &G services, -2.6% Software -2% among the bigger losers while many sectors fell in the region of 0.5 to 2%. O&G Producers , banks and FS all outperformed which may be suggesting that tomorrow’s Brexit outcome may well be bullish.

Oil dropped 0.5% but remains above the $60 mark while gold rallied 0.3%, copper dropped 0.8% with iron ore flat.

UK Market Narrative Fri 11 2019: Rally extends another day

As suggested in yesterday’s update, the multi-day rally took a pause today as gains were booked and positions closed in advance of next week’s key events including the UK Brexit vote (which may impact sterling negatively if the defeat is very large or conversely be positive if the defeat is narrower). Today’s move of over 1%  in GBP vs USD may be portentous. Next week also sees a slew of trading updates and earnings as well as UK CPI, PPI and Retail Sales Data. In the UKX, PSON, PSN, ABF RIO are among those reporting while 22 of the MCIX report 19 AIM shares and 15 Small Caps. In total 28 names are reporting from Consumer Services or Consumer Goods which will further update on how Christmas performed in the sector. 19 Industrials, 6 Financials, 5 Basic Materials and 3 O& also report: full details in the Calendar

Today’s price action saw the UK indices broadly flat to negative with the UKX and NMX off -0.2%: the MCIS continues to rally gaining another 0.8% while the AIM 100 was up 0.3%.

Looking beneath the indices: in the NMX only 8% of share are below their 8EMAs while only 6% are below 21EMAs with good recovery on the 5o MAs (34% below). The longer term 200MA is also improving although almost 75% of NMX shares are below their 200MAs. The MCIX is showing almost identical levels and is even more bullish on the shorter timeframes with only 8% below the 8 EMA and 4% below the 21EMA. AIM fell much further and is still recovering so 40% are below the 8EMA, 47% below the 21EMA while 60% are below the 50 and almost 80% below the 200MA

Oil pulled back almost 1% to below the $61 level while GBP gained over 1% to rally above $1.28 . Gold rallied 0.3% while the base metals performed well with copper up over 1% on the day

In sentiment, UK VIX dropped 12.5% to below 17: European VIX is at 17.5 while the US VIX is now below 19 and the CNN Fear Index is at 30

UK Market Narrative Thurs 10 Jan 2019: Rally extends another day

The multi day rally post-Christmas showed signs of tiring today as the markets distributed gains and traders booked profits.   Given the magnitude of the recent losses, a retest of lows in the coming weeks cannot be ruled out. That said, price action in the UKX remains very strong with the index closing up 0.5% almost on intraday highs and crucially above the 50MA. This is the first close above a 50 since August 2018: not to get too excited, the 50MA has also dropped by 20% since then. What is significant is that it was behaving as resistance in the past: if the index holds north of this, and IF this become support then this rally may well be more prolonged. The dark spectre of Brexit does remain on the horizon but arguably, the international nature of the UKX constituents will inure this from the worst impacts. The domestic focused MCIX paused today slipping back 0.1% but also remaining above the 50MA. It is up over 8% from its recent lows but is still down 16% from the highs of July 18. AIM 100 continued to rally up 0.4% while the TechMARK gained 0.4% and remains the most bullish of the UK indices.

TSCO pleased the markets with its TU and rallied 2.5% further boosting F&D Retail which was one of the strongest performing sectors today.  Banks Life Insurance and Utilities rallied over 1% while O&G rose 0.8% as Brent oil continues to advance and now sits above the $61 level. Disappointing results  from MKS and DEB  in Gen Retail names saw the index pullback 1.3% today while an analyst downgrade of BRBY saw Personal Goods slip 0.5%.

GBP pulled back against USD to $1.276: gold slipped 0.5% while base metals pared recent gains.

In markets' sentiment: VFTSE has rallied over 10% to above 19 which may be signalling some volatility ahead: the US Fear and Greed index is now at 30 showing much less fear while the AAII sentiment survey has turned from Bearish to Bullish with levels in line with historic averages.

Companies Reporting 14-18 Jan 2019

Companies Reporting
AIM:          RST, BOO, EHG, KGH, OPM, IKA


See full details in Financial Calendar

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