Equities: What’s moved and why, May 24th 2017

This report will look at the day’s movers and try to sew together themes in the markets that could benefit your trading.

This report will look at the day’s movers and try to sew together themes in the markets that could benefit your trading.

Overall, global markets had a mixed session, with equities in the US closing up slightly, while most European indices, bar the FTSE 100, were lower on the day.

UK and US: contrasting oil sectors

Top performing sectors of the FTSE 100 included the IT and the energy sector. UK-listed energy shares were benefitting from an expected uplift to the oil price on the back of Thursday’s Opec meeting. However, the same wasn’t true of the S&P 500, where the energy sector actually registered further declines, after Donald Trump said that the US could sell off some of its Strategic Petroleum Reserve (SPR) to help fund the US deficit. Although his plans are very vague at this stage, it was enough to send shivers down the spine of US energy shares, although the prospect of an oil glut in the US doesn’t seem to be impacting UK shares just yet, although it may do so down the line.

In depth: FTSE 100 and the Dow Jones

Looking at the FTSE 100 and the Dow jones Industrial Average in more detail, the biggest gainers in the FTSE 100 were Easyjet (boosted by a ratings upgrade), Tui and Severn Trent, up 3.3%, 2.8% and 2.49% respectively. Tui looked like it benefitted from Easyjet’s upgrade, also the stock is trading at a fairly low P/E of 15, which makes it look cheap compared to the rest of the FTSE100, which is trading at a P/E of 34.0.

The biggest losers in the FTSE 100 included Kingfisher, who reported weaker than forecast earnings, dropping more than 7% on the day. Rangold, the gold miner was the third biggest loser in the FTSE 100, falling 1.5%, and bucking the trend for miners and energy companies more broadly.

In the Dow Jones, the mood was risk friendly, Goldman Sachs was the best performer followed by Coca Cola and Du Pont, with the latter benefitting from activist investor Dan Loeb sounding supportive of the Du Pont/ Dow Jones merger.

The biggest losers included GE, Verizon and Cisco, with the telecoms industry suffering particularly hard on the day.

The broad mix of winners on the Dow Jones on Wednesday suggests a risk-on tone for the market, and the Dow Jones continued to rise throughout the day.  This corresponded with a decline in the Vix, which fell below 10.0 at one point, also reinforcing the risk-on tone to the market, which bodes well for future sessions. 

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