FTSE 100 Climbs to 4-Month High

Daily Analysis - 11/10/2017

UK Economic Resilience Lifts Equity Benchmark

A raft of key data points indicating the British economy largely outperformed expectations during the late summer months buoyed investor sentiment and sent FTSE 100 futures to a four month high on Tuesday. GBPUSD also rebounded from the lows of last week to currently trade around 1.3190 despite the long shadow of Brexit negotiations.

FTSE Futures Reclaim 7500

The British economy likely maintained its growth momentum during the third quarter, underpinned by a rebound in manufacturing and construction. Tuesday’s figures from the Office for National Statistics revealed that industrial production gained 0.20% in August from the prior month, while construction output grew 0.60% during the same period.

However, the one disappointment metric was the country's August trade deficit ballooning to GBP 5.63 billion from an upwardly revised GBP 4.24 billion shortfall in July. Separately, a survey conducted by the British Retail Consortium found that same store retail sales increased 1.90% year-over-year in September, supported by higher food and clothing prices.

FTSE 100 futures broke above the key resistance at 7500 on greater-than-average volumes in late Tuesday trading, with the benchmark last seen around 7510.

Copper Hits Highest Point in 4 Weeks

Expectations of potential shortages in top consumer China and a steady US dollar drove copper prices to a four-week high on Tuesday. China had unveiled plans in July to curb waste imports that included scrap metal.

With the Chinese National Congress drawing nearer, investors are speculating that severe restrictions could tighten supply ahead of a historical period of peak demand in the country.

The industrial metal was also supported by news that Congo’s mining minister had ordered a joint venture with Chinese investors to halt export of raw copper before processing due to its low value in the international markets.

Copper futures for October delivery are trading around $3.0400 per pound, $3.0600 represents the immediate price ceiling on the upside, a break above which could see copper prices appreciate further.

Australian Consumer Confidence Jumps

Consumers in Australia are exhibiting more optimistic sentiment in October, with the number of optimists outweighing pessimists for the first time since November of last year.

According to the widely-followed monthly survey, the Westpac-Melbourne Institute Consumer Sentiment Index rose 3.60% to 101.4 in October from 97.9 in September, the highest level in the index since October of 2016. The strongest gains were recorded in the sub-index for economic conditions over the next 12 months, which surged 7.10% to a four-year high.

Among the professional groups tracked by the survey, trade workers experienced the biggest jump in confidence, up 22.00% month over month while reflecting continued strength in residential construction activity. The upbeat report came despite weak retail sales figures last week that fanned investor concerns about rising debt and stagnant wages.

AUDUSD gave back most of the gains recorded during the Asian overnight session, with the pair currently hovering around 0.7785.

Canadian Housing Starts Decline

Following eight straight monthly increases, housing starts in Canada fell in September, though not as sharply as forecast.

Data from the Canada Mortgage and Housing Corporation delivered on Tuesday showed that starts dropped -3.90% to an annual rate of 217,118 units from August’s upwardly revised figure of 225,918.

Although the figure managed to beat the consensus estimate of a dip to a 210,000, the 12-month average remained unchanged at roughly 212,000. Urban housing starts fell -5.10% to 198,910 units, while rural starts accounted for an estimated 18,208 units. The losses were concentrated mostly in Ontario, Canada's most populous province, which reported its worst month since May.

EURCAD is trading just below strong resistance sitting at 1.4800 after having gained in each of the prior two sessions.