FTSE unable to hold 6600 level

Heading into the close the FTSE 100 has surrendered most of its gains for the day, up just ten points as it once again fails to hold the 6600 level.

In case anyone had forgotten, it is high summer in financial markets (the weather in London notwithstanding). This means low volumes and choppy trading, with today’s action being a classic of the genre. This will test the patience of traders and financial analysts across the globe, but it was always going to be the norm given that this summer has been mercifully free of the crises that have marked previous years. Normal service will be resumed, we hope, in September.

UK markets

Good European economic data and some more strong news out of the US has been enough to keep European markets in positive territory throughout the day, even if the FTSE 100 has not been keen on holding above 6600. The mining sector rose for a second successive day, and once again an insurer was providing an update on the progress of its business, after Resolution came in slightly ahead of expectations.

Much heat but little light has been expended over news that house price inflation in the UK is back with a vengeance, but any homeowners rubbing their hands with glee over the prospect of becoming wealthier without having to lift a finger will have to also worry about the latest surge in rail fares. Mark Carney’s Bank of England may be untroubled by inflation but it will continue to eat away at the cost of living for everyone else.

US markets

The wait for 1700 on the S&P 500 goes on, with the index showing no inclination whatsoever to push back to this level. US retail sales were a touch better, but for some this merely boosts tapering expectations for September, as evinced by the quick drop into the red soon after opening for Wall Street. The drama at JC Penney, where activist investor Bill Ackman has run up the white flag in his latest disagreement with the retailer’s board, is a welcome distraction, and it at least leaves the company freer to worry about small matters such as its very existence in coming years.

Commodities

Silver's upstart rally has taken a severe knock today, with the metal now firmly off its highs. While still at a level not seen in over a month, silver is now heading dangerously close to overbought territory that may see it become vulnerable to a degree of profit-taking.

FX

USD/JPYU is enjoying a second strong day after more hints that Japan might look to tinker with its tax policy in order to help keep growth prospects healthy. The US retail sales numbers helped the currency pair to push through ¥98, which means the next likely port of call is ¥100, the highs last seen at the beginning of the month.

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