FTSE lower but US indices head for record highs

In a rare bit of positive news about Brexit the EU’s chief Brexit negotiator Michel Barnier said that the EU is prepared to offer a partnership with Britain "such as has never been with any other third country." This could include economic, foreign and security policy ties but will not involve anything that would weaken the EU’s single market, he said.

The comments indicate that the UK could avoid the worst case scenario – a no-deal Brexit – which has been spooking the market for several weeks now and that instead there is a possibility of a deal before the end of the year.

It remains an open question what kind of concessions the UK will have to make for the deal to be signed. Barnier’s comments were followed up by a similarly upbeat assessment by UK Brexit secretary Dominic Raab who told the Lords EU committee he was confident a Brexit deal was within sight. Though this is positive for the markets it continues to be a political hot potato and could still cause some resistance from the pro-Brexit quarters in Parliament.

The forex market embraced the news helping the pound to jump 1% against the dollar and 0.98% against the euro.

Meantime in the US …

The US economy continued powering higher in the second quarter, growing 4.2% compared with 4.1% in the first quarter. Higher government spending and business investment helped the country’s economic growth as did President Trump’s massive tax cuts.

Corporate profits rose 7.7% over the past year and this was reflected in the strength of all the top equity indices. There seems to be no stopping the US indices at the moment, even with the country’s trade disputes bubbling in the background.

The DJIA traded at 26,151.47, within reach of its all-time high hit in January this year, while the S&P 500 was at 2,909.93, its record high.

A US stock drop pushes oil price higher

Oil prices in London and in New York were also heading for their highest close this year ahead of the Wednesday contract expire. Brent Crude traded up 0.71% and West Texas Intermediate traded up 1.09% following a report showing that US crude supplies declined more than expected last week.

However, US crude supplies have been bouncing up and down ferociously over the past few weeks making it impossible to draw reliable conclusions about the actual state of US oil demand at present. Only a longer view could really put this into perspective.

This report is intended for general circulation only. It should not be construed as a recommendation, or an offer (or solicitation of an offer) to buy or sell any financial products. The information provided does not take into account your specific investment objectives, financial situation or particular needs. Before you act on any recommendation that may be contained in this report, independent advice ought to be sought from a financial adviser regarding the suitability of the investment product, taking into account your specific investment objectives, financial situation or particular needs.

StoneX Financial Pte. Ltd., may distribute reports produced by its respective foreign entities or affiliates within the StoneX group of companies or third parties pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the report is distributed to a person in Singapore who is not an accredited investor, expert investor or an institutional investor (as defined in the Securities Futures Act), StoneX Financial Pte. Ltd. accepts legal responsibility to such persons for the contents of the report only to the extent required by law. Singapore recipients should contact StoneX Financial Pte. Ltd. at 6826 9988 for matters arising from, or in connection with the report.

In the case of all other recipients of this report, to the extent permitted by applicable laws and regulations neither StoneX Financial Pte. Ltd. nor its associated companies will be responsible or liable for any loss or damage incurred arising out of, or in connection with, any use of the information contained in this report and all such liability is hereby expressly disclaimed. No representation or warranty is made, express or implied, that the content of this report is complete or accurate.

StoneX Financial Pte. Ltd. is not under any obligation to update this report.

Trading CFDs and FX on margin carries a high level of risk that may not be suitable for some investors. Consider your investment objectives, level of experience, financial resources, risk appetite and other relevant circumstances carefully. The possibility exists that you could lose some or all of your investments, including your initial deposits. If in doubt, please seek independent expert advice. Visit www.cityindex.com/en-sg/terms-and-policies for the complete Risk Disclosure Statement.

ALL TRADING INVOLVES RISKS. LOSSES CAN EXCEED DEPOSITS.

City Index is a trading name of StoneX Financial Pte. Ltd. (“SFP”) for the offering of dealing services in Contracts for Differences (“CFD”). SFP holds a Capital Markets Services Licence issued by the Monetary Authority of Singapore for Dealing in Exchange-Traded Derivatives Contracts, Over-the-Counter Derivatives Contracts, and Spot Foreign Exchange Contracts for the Purposes of Leveraged Foreign Exchange Trading. SFP is also both Derivatives Trading and Clearing member of the Singapore Exchange (“SGX”). SFP is a wholly-owned subsidiary of StoneX Group Inc.

The information provided herein is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to invest, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently, any person acting on it does so entirely at their own risk.

The information does not represent an offer of, or solicitation for, a transaction in any investment product. Any views and opinions expressed may be changed without an update. To understand the risks and costs involved, please visit the section captioned “Important Information” and the “Risk Disclosure Statement”.

The information herein is not directed to, or intended for distribution to or use by, any person or entity who is a citizen or resident of or located in any locality, state, country or other jurisdiction where such distribution, publication, availability or use would be contrary to law or regulation.

StoneX Financial Pte. Ltd. 1 Raffles Place, #18-61, One Raffles Place Tower 2, Singapore 048616. Tel: 6309 1000. Co. Reg. No.: 201130598R.

This advertisement has not been reviewed by the Monetary Authority of Singapore.