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A lack of catalysts all round means that the market is something of a curate’s egg today, with some excellent parts and others less impressive. On the positive side is the mining sector, which is racing higher thanks to the combination of Chinese data and a strong performance by gold and silver in recent sessions. However, much else has remained in the doldrums, as there has been little other news to excite investors. Over it all, Fed tapering continues to cast its long shadow.
For the FTSE 100 and its peers on the continent, the day has seen very little capable of exciting traders. This is due in no small part to the absolute avalanche of data that will be seen later in the week, when the eurozone and the UK will keep everyone busy. Insurer Prudential was able to report excellent progress, with the Asian division continuing to do its bit in banishing the unpleasant memory of the AIA acquisition. A boost to the dividend will also help the Pru do its bit to catch up with its rivals in the sector, whose dividend yields continue to outshine that of this most British of institutions.
The Dow has begun the week in uncertain form, dropping quickly into the red before staging something of a rebound. We continue to look in vain for a real bounce-back on the S&P 500, which lags behind its cousins in Europe. But it is still hard to escape the sense that this index is merely waiting for the right moment to spring higher, given the wall of negativity that seems to attend its every downward move.
Gold’s latest attempt to break $1350 is commanding the attention of commodity markets, while its cousin silver is dragged higher. Both India and China continue to guzzle substantial amounts of the former, but China is doing its best to surpass its southern neighbour as the biggest consumer of the yellow metal. Even so, this is scant consolation for gold bulls who have seen their favourite asset lose much of its appeal in recent months. This latest rally could easily fizzle if traders think an early taper is on the cards from the Fed.
With so much Japanese data released in the past 24 hours, the emphasis has inevitably been on USD/JPY today. The dollar has come out on top so far. Markets take the view that the latest figures merely give additional credence to the idea that the Bank of Japan and the Japanese government have not been deterred in their plan to reinvigorate the nation’s economy. Having secured a bounce of Y96.00, the next question is whether the currency pair can sustain the momentum from here. Japanese exporters will no doubt hope that it can.