Spreadex Market Update
FTSE 100 blasts higher led by retail shares
The FTSE 100 was a flagbearer for the global rally in equities yesterday, rising 1.7% and pushing into the critical 7500 level. Better than expected results from Nike saw investors pile into global retailers during the busy holiday shopping period.
JD Sports and Ocado led the blue-chip index risers, up 6.1% and 4.2%, respectively, while oil majors added the rally in UK 100 shares as oil prices gained ground.
Key Factors for Today
- FTSE 100 rallies
- Indices follow through on bullish candles
- Gold breaks key level
- UK GDP miss weighs on soft GBP/USD
Noteworthy
- US final Q3 GDP data due (1.30pm GMT)
- Bunzl Sees 2022 Revenue Rising on Inflation-Driven Growth, Acquisitions
- Top executives Caroline Ellison, and Gary Wang plead guilty to fraud at FTX
Indices follow through on bullish candles
There was follow through on the bullish hammer patterns we noted in yesterday’s report - with most major indices gaining ground on Wednesday. The hammer patterns occurred as stocks initially sold-off in reaction to the shock policy change at the Bank of Japan but then rallied to close the day higher despite the ‘bad news’.
The rally was spurred by better than expected earnings from Nike, which saw its shares pop +12% on the day and lifted retail stocks both in the US and abroad. With rising concern about recession in 2023, investors were relieved to hear positive news from a global retailer.
UK GDP misses expectations
While most currency pairs moved higher versus in the USD over the past 24-hours in a generally risk on tone, the British pound bucked the trend, extending its recent move down from a peak of over 1.24 last week to below 1.21.
On Thursday morning, the final iteration of UK GDP, typically a non-event given its ‘rear view mirror’ nature of reporting data from 3 months ago, surprised to the downside, coming in at -0.3% versus -0.2% in the prior release. It highlighted the economic weakness of the UK, which the Bank of England has said is already in recession.
Even if the Bank of England were to keep raising rates to fight inflation over the next few meetings, traders might be reluctant to go long GBP/USD when an extended recession makes a pause in rate hikes (and possibly new rate cuts) increasingly probable.
Gold breaks key level
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