FTSE recovers some poise

Equity markets have shown some backbone, defying the US president's negative comments regarding their ability to remain at these levels.

If progress in resolving the disagreement between the two US political powers continues to lag, Monday may bring with it a considerably less bullish mindset.

European markets stay afloat

Considering the uncertainty surrounding the US, European markets have done very well to keep their heads above water; it will be even more impressive if they can maintain that form for the start of trading next week.

Tate & Lyle has posted further weak figures today, with a combination of soft US dollar strength and poor weather conditions receiving the majority of the blame. Carpetright investors have had the rug pulled out from beneath them, as it is announced that CEO Darren Shapland is leaving with immediate effect and Lord Philip Harris will take over the reins of chairman and majority shareholder.

Royal Mail has confirmed that its IPO price will be at the top end of the range, which comes as little surprise judging by the popularity of the grey market that IG have been running. Launched three weeks ago at a market cap of $10.5 billion, it has been pushed to $17.5 billion.

Although banks might still be socially tarnished, their appeal to investors appears to remain strong, with 94.6% of shareholders taking up their rights in Barclays.

Non-farms absent

The American public’s patience with their politicians is beginning to wear pretty thin, with the constant one-upmanship and political point-scoring failing to tackle the issues at hand. At the beginning of the week the perception was that they would eventually sort it out and put the greater good of the nation first, but we must remind ourselves that these are politicians!

As next week progresses, equities and currencies will begin to factor in the possibility of the US hitting its debt ceiling more heavily, as well as the chance that it might default on its debts. Due to the US government shutdown there has been an absence of the monthly non-farm payroll figures, which usually help markets form an opinion of the nation's economic health. 

Safe-havens confused

The on/off flight to security that has descended on traders has ensured that the gold price doesn’t know whether it’s coming or going; however a weekend of indecision and bickering in the US should ensure some support in holding it above $1300. 

With China having had bank holidays for most of the week, copper has shown all the signs of indecision you would associate from an army whose general is missing.

Corrective forex movement

GBP/USD has, in the last 24 hours, had a healthy corrective pullback, dropping 150 pips in the process. This could be relatively short-lived, as overriding developments in the US economic horizon are only likely to encourage US dollar weakness.

The EUR/USD chart paints a very similar picture, if a little less corrective. With the export economy of Germany still the key to the EU’s ability to emerge from recession, this will be a trend they would prefer to see the back of.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.