30.05.14 Friday Morning

Despite drawing to the end of another short week here in London, global markets have provided new record highs once again whilst also reacting to potential changes in the ECB monetary policy. With a relatively light economic calendar throughout the week, investors will be keen to get stuck into next week which already looks set for a volatile week of trading with important macro-economic data and conferences happening regularly.

London started the short week in positive territory on Tuesday, following on from a positive session throughout Europe on Monday as investors digested European Parliament elections. Slightly eased tensions in Ukraine helped markets gain as their elections went ahead without escalating into violence. With little economic data released on Tuesday, the FTSE 100 shifted upwards off the back of positive sentiment which flowed throughout European markets at the beginning of the week. American markets also took hold of the positive sentiment, starting the week on strong grounds whilst hitting record highs. The S&P 500 began hitting record intraday highs on Tuesday and has continued gaining throughout the week creating brand new closing highs. At present, with the bullish market, the S&P 500 is trading around the record 1920 level. Thursday evening also saw record closing prices on Wall Street with the index ending trading at 16698.74.

It has not only been American markets hitting the milestone levels this week; European markets have also been enjoying the incredibly bullish market. The German Dax has been edging towards the key 10,000 level all week, hitting all-time highs a number of times. We are currently seeing some resistance around the 9950 area as the bears are fighting back to prevent the key milestone being hit.

On the shares front, AstraZeneca were back on the headlines as Pfizer announced they are to walk away from the £69.4bn takeover attempt. Shares in AstraZeneca fell a further 2.3% as the news surfaced. In other M&A news, shares in Smith & Nephew soared over 11% on Wednesday as rumours surfaced that Stryker Corporation were planning a potential bid for the UK listed company. Due to the incredible movement in the share price, Stryker were made to comment on the matter which they soon denied. Seconds after the statement surfaced which made investors aware they weren’t planning a takeover bid, the share price in Smith & Nephew tanked dramatically by 10% to trade around the level before the rumours.

Gold prices have had an extremely weak few days of trading, dropping to a 16-week low of around $1255 as global bourses continue to rally. US unemployment claims also came in better than forecasted at 300k on Thursday, further pushing the price of Gold down as the US begins to recover.

Stock of the week – Smith & Nephew
Shares in Smith & Nephew rocketed over 11% on Friday as bid rumours surfaced that Stryker Corporation were planning to place a bid in the company. Soon after this was released, Stryker commented that they had no such plans and in return Smith & Nephew’s stock price dropped dramatically back toward its original levels.

Economic Diary

Monday 2 June
- AUD Building Approvals
- GBP Manufacturing PMI
- ISM Manufacturing PMI

Tuesday 3 June
- AUD Retail Sales
- AUD Cash Rate
- AUD RBA Rate Statement - GBP Construction PMI
- EUR CPI Flash Estimate

Wednesday 4 June
- AUD GDP - GBP Services PMI
- USD ADP Non-Farm Employment Change
- USD Trade Balance
- USD ISM Non-Manufacturing PMI

Thursday 5 June
- GBP Asset Purchase Facility
- GBP Official Bank Rate
- EUR Minimum Bid Rate
- EUR ECB Press Conference
- USD Unemployment Claims

Friday 6 June
- USD Non-Farm Employment Change
- USD Unemployment Rate

Earnings

Tuesday 3 June
- Londonmetric Property PLC
- First Property Group PLC
- WYG PLC Wednesday 4 June
- Advanced Computer Software Group PLC
- RPC Group PLC
- Workspace Group PLC
- Alternative Networks PLC
- Findel PLC

Thursday 5 June
- Acal PLC
- VP PLC
- Bellway PLC
- Wincanton PLC