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Market Update - 07/10/16

Friday, October 7, 2016

Disclaimer: This is an informal commentary by one of our Market Analysts. It should not be taken as investment advice and is made available only on that basis.
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US: the S&P closed +5bps, +0.27% from the London close, on volumes -6% vs. the 30 day average. SPX trended lower for most of the morning until ECB Vice President Constancio backed off what was seen as a hawkish statement earlier this week regarding the future path of tapering. SPX promptly rallied, then proceeded to trade in a 3.5 point range for the remainder of the day. Outside of equities price action in most asset classes could be described as more of the same. GOLD fell 0.93%,closing lower for the 7th consecutive day and falling below the 200 DMA. Treasuries fell for the 5th consecutive day with 10yr yields rising to 1.74%. Oil topped $50 a barrel for the first time since the end of June. The odds of a December rate hike inched higher to 64%. Materials, Tech and Real Estate led the market higher. Health Care the greatest laggard, followed by Telcos and Industrials.

All talk about the GBP ‘flash crash’ overnight in Asia just after midnight our time, when currency fell to a 31 year low with traders blaming selloff on Algo orders. Currency fell 6.1% versus USD, to a low of $1.1841, but at least one electronic trading platform had a transaction at 1.1378 v USD. Currency now at 1.2438, while against EUR at .8934.

Deutsche Bank talking with securities firms to explore options to raise capital, some talk of selling a stake in asset management arm via a flotation.

Total agreed to sell Atotech, a maker of specialty chemicals, to The Carlyle Group for $3.2 billion.

ABN Amro Group shares advanced 2.1% in Amsterdam trading after reports that the Dutch lender rejected an approach from Sweden’s Nordea Bank

Delta Lloyd rejects NN Group bid, saying undervalues company.

Hollande has said the EU should prepare for a 'hard Brexit' outcome, did not help GBP overnight.

Twitter shares tumble 20% amid talk of auction turmoil, as Google said to not make an approach.

Cevian said to evaluate buying stake in Eon

Innogy (IGY.GR) and Premier Asset Mgnt (PAM.LN) start trading today

In Europe, all markets are open. In other regions, China is closed.

Aryzta held its first CMD ( Capital Markets Day) in 6 years in Toronto yesterday. It was full of positivity and lofty targets says brokers. Of note is that they re-iterated FY17 guidance and set targets for 2020/2021.

Bank of America recommended in a note earlier this week to buy Italian equities after a very poor year so far and short gold.

Fracking in UK set to start after a 2.5 year battle.

Topix falls 0.2%, heading for 1st loss in 5 sessions, led by retail and construction groups

Snapchat parent, Snap Inc working on a flotation next year, valuing company at $25bn, well up on last valuation, will be largest deal for some years.

• Markets fall -.5% after open, UK better on lower GBP, Oil firmly above $50 now at $52.76.