Market Talk – January 22, 2016


As they say: “What a difference a day makes”. Dealers were telling us yesterday that they left the sentiment had changed for whatever reason they were calling this one, the Mario Move. Continuing its overnight run into Asian trading eventually easing above the $30 mark it gave the Equity dealers the comfort to take stocks back up. The Nikkei returned its best session in a while, surging almost 6% with exporters (Toyota, Honda and Sharp +6.7%, 6% and Sharp up 11% at one stage) driving the move. Despite a midday drift into negative territory for the Shanghai, it eventually joined the others (HSI and ASX) and all closing higher – the best being Hong Kong returning 2.9%.
European futures were already way up ahead of the cash open. Exploration companies and Miners were again the core drivers with Shell, Tullow Oil and Royal Dutch all aiding to the 3% gains across the board. However, in afternoon trading ahead of the weekend some miners (Glencore, Rio Tinto and Anglo American) turned lower despite the positive Mario Move.
As the day wore on dealers began to question move and we started to see a few bids being hit as opposed to offers lifted. Off of the mid-mornings highs and nerves started to appear after what has been a crazy week but by the close of business confidence returned and we closed with daily gains of DOW +1.35%, S+P +2% and NASDAQ +2.7%. The Dow avoided its weekly bearish and bottomed on target to the day with the Directional Change.

It may only be a $2.66 move but 9% is 9% and closing above $32 is exactly what dealers needed ahead of the weekend to restore momentum. WTI and Brent are almost trading dollar for dollar but 10% gain for Brent is a move that Asian stocks will appreciate (void of any weekend news). Gold saw on of its tightest ranges in a long time. Playing between $1096 and $1102 many dealers are pleased the bounce remains. However, if we see equities and oil perform again next week the gold weakness could very well return.

The USD Index (DXY) did perform again today closing this evening at 99.585 (+0,5%). Given the rally in oil we did see some recovery in the Russian Rouble with a healthy (long overdue) bounce of 5.5% against the USD. The Euro continues to drift closing this evening below the 1.08 mark at 1.0790. The JPY also lost ground closing 118.77 (against the USD) which helped aid the DXY performance.