Update on the Current Market, Early May 2016

 
 
 
Forex traders with their eyes on the bourses open for business this May Day saw European equities surging upwards, with the pace being set by major export stocks.

 

With exports surging by 2.7 per cent, BMW was the biggest single winner as Frankfurt’s Xetra Dax 30 climbed by one per cent in European trading centres open for business. Meanwhile, VW’s export tally rose by 2.2 per cent, and financial stocks, led by Allianz, looked livelier, also climbing by 2.2 per cent

 

Similar trends were seen in Paris, where Airbus gained more than two per cent to top the CAC 40 leaderboard, which grew by 0.4 per cent overall (London’s equities markets were closed for the Bank Holiday).

 

The FTSE MIB went against the European grain, restrained by its financial stocks following the Italian government’s bailout fund rescue of Italy’s 10th largest bank, Popolare di Vicenza, which had seen a closely scrutinised €1.75bn capital call flop spectacularly. Milan’s chief index dropped by 0.3 per cent, with its top seven fallers all based in the banking sector.

 

Even so, the main action in this holiday-littered session arose in Asia. With the Japanese yen reaching an 18-month high against the USD, it comes as little surprise to see that Japanese shares led the selling while the greenback continued its broader descent.

 

Oil prices were a tad lower, but they remained in steady territory, with recent ranges consistently coming in above the critical $45-a-barrel level. This has contributed to renewed optimism in the energy sector. The international benchmark, Brent Crude, slipped to $46.79 a barrel (a dip of 1.2 per cent), while the US benchmark, West Texas Intermediate, slipped one per cent to $45.45

 

For currency watchers deliberating on any tweaks to their Forex trading strategies, the USD has continued its downward slide, with the Euro gaining 0.3 per cent against it to reach $1.1480. The GBP remained steady at $1.4617.

 

Expectations are growing again that the Bank of Japan will be forced to take additional stimulus measures as the yen continues its seemingly inexorable rise.