Grim data releases from Japan today are reflected in the tone and forecasts released by the Japanese central bank. Industrial production fell 3.6 per cent in the month to June, more than double forecasts and compares to a 2 per cent rise in May. Annualised it fell 4.1 per cent versus a 2.1 per cent drop in May, one of the lowest readings of the last 6 years. The Bank of Japan noted that risks to inflation and economic growth were skewed to the downside and admitted that its 2 per cent target for CPI was ‘out of sight’. Currently running at 0.5 per cent, it should reach 1 per cent growth this fiscal year and core CPI will to rise to 1.6 per cent in March 2022. GDP should grow by 0.7 per cent this financial year.
City AM reports this morning that UK media advertising spend rose 4.2 per cent to £6 billion in Q1 this year, the 23rd consecutive quarter of growth. Data compiled by the Advertising Association and trade body Warc have online radio with the largest gains, advertising spend up 26.5 per cent – linked to the fact commercial radio saw a record number of listeners in Q1 2019. Total spend should reach £24.6 billion this financial year and grow by 5.3 per cent in 2020.
DAX 30
Looking a tad jaded as what little bullish momentum there was dissipates.
SHORT TERM TRADER: Short at 12360; stop well above 12600. Target 12000.
POSITION TAKER: Square.
FTSE 100
Bad day for sterling (off 1.5 per cent against the euro) translates as a good day for FTSE 100 (up 2 per cent). Now overbought, at its highest level in a year, and not far off the record 7900 set in May 2018.
SHORT TERM TRADER: Stopped out at a small loss.
POSITION TAKER: Stopped out here too for another loss.
S&P 500
Not as overbought as one might expect as we hover at the record high and the top of a large broadening formation. President Trump took to Twitter again yesterday telling the Fed what to do at their FOMC meeting today and tomorrow, adding ‘’the Fed has made all the wrong moves’’. Traders are currently pricing in a 75 per cent chance of a 25-basis point cut tomorrow, while Mr Trump wants more.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
BRITISH POUND/US DOLLAR
Another bad day for cable as it slumps through the bottom of the potential broadening base pattern to hit its lowest price since March 2017 – not since the referendum though where the low was a brief spike to 1.1800 in October 2016. As oversold as it was late May, the usual voices clamouring for parity can be heard. Note that yesterday’s 1.3 per cent loss is not catastrophic in the scheme of things.
SHORT TERM TRADER: Square.
POSITION TAKER: Stopped out and licking my wounds.
EURO/US DOLLAR
Holding quite comfortably towards this month’s lower levels in the face of a relentlessly negative MACD.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
GOLD
Dreary as we consolidate in a sort of right-angled triangle with little momentum.
SHORT TERM TRADER: Square.
POSITION TAKER: Square.
