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A slow-ish open for European stock markets but all the major bourses are just about trading higher this morning. The FTSE 100 trailed, trading 0.1% higher, whilst the DAX rose 0.3% to north of 15,500. The DAX has hit record highs, whilst the FTSE 100 is at its highest in over a year. US futures are a little lower this morning after the S&P 500 and Dow Jones closed at record highs on Friday, with both advancing more than 1% last week. UBS raised its forecast for the S&P 500 to hit 4,400 by the end of the year, or around 5% above the current all-time high.

Global stock markets remain supported by a combination of the very strong cyclical impulse as vaccinations and better economic resilience to lockdowns spur activity, ongoing monetary policy support and some pretty large fiscal stimulus in some parts of the world, most notably the US. As highlighted by Moody’s, the $5.4tn in excess savings, which is worth around 6% of global GDP, is not to be ignored as consumers come back to the fray. US bank earnings and the release of bad loan loss provisions show the extent to which aggressive policy action has stopped a lot of potential damage to the economy. A retreat in US yields has helped calm nerves but value stocks remain the play as the global economy reopens. Discretionary spend is the name of the game.

Shares in Juventus rose 7% after it was one of the ‘dirty dozen’ football clubs to announce plans for a breakaway European Super League. The financial incentive for the clubs is plain to see, with a multi-billion dollar package at the heart of the scheme, albeit it would forever break the integrity of the club game. The sort of additional revenues the ESL will deliver would need to be offset by a potential material decline or total loss of existing earnings from media deals through national leagues and UEFA. Watch for Manchester United shares to open in the US later – currently being called to open 4% higher in pre-market trade. Shares in Borussia Dortmund and Ajax are higher, although they are not currently among the 12 founding clubs.

Looking ahead to this week, it’s going to be a busy period for corporate earnings as ten Dow components and more than 70 S&P 500 names report in the coming days. Coca-Cola (KO) reports today and is expected to show a 2% decline in earnings per shares to $0.50 year on year, whilst revenues are seen flat at $8.6bn. KO shares are still well short of the pre-pandemic levels around $60, but this probably reflects the company’s reliance on demand stemming from big events, full stadia, festivals and concerts. Without the return to pre-pandemic levels for sporting and entertainment event attendance, Coca-Cola may struggle to get much higher. IBM and United Airlines are also reporting today.

Bitcoin tumbled over the weekend, dropping from around $62,000 by our Friday close to gap about 10% lower at the Sunday open. Prices were around 15% below their all-time highs hit last week in the runup to the Coinbase IPO but have pared losses in the last few hours to trade roughly 10% off their all-time high. Numerous other crypto assets also fell sharply. Prices had fallen on Friday as Turkey moved to ban the use of cryptocurrencies, whilst rumours later circled about the US Treasury looking to charge several financial institutions for money laundering using cryptocurrencies. A lot of this may be down to speculative froth coming off the boil in the wake of the Coinbase IPO.

Elsewhere, sterling is higher this morning with the dollar on the back foot. The Dollar index has opened up fresh lows at 91.40, its weakest in a month. GBPUSD moved to 1.38680 where it is testing the 50-day simple moving average resistance. A break higher calls for a return to 1.40. The euro is also on the advance and testing big resistance at 1.20. Gold is making good on its promise and is now through the top of the downwards channel after last week’s breach of the 50-day SMA. RSI trend resistance is important and may offer some scope for a pullback from the top Bollinger band.

Gold is making good on its promise and is now through the top of the downwards channel after last week’s breach of the 50-day SMA.

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