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Markets have recovered from last night’s US voting-inspired panic, ironically instigated by a strong US open this afternoon. The last 24 hours have shown that every fresh piece of information about Syria is likely to send a flurry of panic around the markets.
Once again the FTSE 100 is wobbling on the back of the US taking another half step towards military action against Syria, with the collapse in US markets last night setting the template for the day’s trading. This morning’s service PMI figures will have given further weight to the Bank of England’s belief that the UK economy is on the road to recovery.
Ryanair’s fall from grace has caught traders by surprise, with the shares plummeting. To a certain extent CEO Michael O’Leary has created a rod for his own back after so many years of the Irish airline beating expectations. Unsurprisingly this news has also rocked confidence in other airlines, with both easyJet and International Consolidated Airlines finding investor loyalty a fickle commodity.
Although not completely surprising, last night's voting in the US Senate means the US move a little closer to taking the fight to Syria, and market jitters have hit equities as a consequence. The early indication is that US traders will claw back some of these losses as they refocus on the important economic data that's in the pipeline. The next three days will go some way to guiding the Federal Reserve's decision on tapering, as today's widening trade gap announcement is followed tonight by the Fed's Beige Book. Thursday's unemployment claims and factory orders are followed by the all-important non-farm payroll figures on Friday.
Following the voting last night in the US, gold has once again jumped above the $1400 level, having had a little wobble for the last few days as the initial panic surrounding Syria subsided. Traders will be keeping a wary eye on the precious metal to see if it can keep this momentum, as they return to their desks after a quiet August. Cotton continues to hover ominously just above its year lows; the change in policy by the Chinese government has seen cotton struggle to avoid hitting these lows.
The snail-like pace of USD/JPY's efforts to break through the ¥100 level continue to mesmerise traders, albeit very much in 'paint drying' style. Converting the nation into fans of Abi-economics has been far from easy, but if the currency can leap over this psychological hurdle many might be converted. This morning’s near-2% fall in the USD/INR has barely made a dent on the run that we have seen in the Indian rupee, offering scant returns for all the efforts the Indian government have made to halt the country’s currency over the last month.