US manufacturing halts European positivity

Heading into the close the FTSE 100 is down 50 points, wiping out the last week's worth of gains in one afternoon.

Europe’s economic-data-driven revival this morning has come to a shuddering halt after the US proved unable to replicate the expectation-beating manufacturing figures. This turnaround in sentiment has been swift, and a residual undercurrent of jitters has been revealed by gold spiking $25 higher intraday.

Mixed fortunes for UK stocks

Pearson’s profit warning has seriously dented market sentiment for the publisher, which has spent most of the day off by as much as 8%. Institutional upgrades have given Marks and Spencer's shares a boost, edging them ever closer to the £5 mark and ultimately 12-month highs. One company whose shares are performing well on the LSE is in fact the LSE. It has seen a 48% increase in third-quarter income, generated by increased volumes of trading and an upturn in companies coming to the market and floating. Scottish & Southern Energy has updated the markets and confirmed a freeze in prices until 2015, which does feel a little like shutting the doors after the horses have already bolted. The last two months alone have seen almost 200,000 customers leave. Considering that the energy supplier now has fewer clients, who are therefore using less energy, it does raise one or two questions over its expectations that full-year figures will show 8.8% growth.

US bombarded with news flow

There is no respite in the flurry of US companies filing their quarterly figures, with reports now due from the likes of Lockheed Martin, Starbucks, Union Pacific and, particularly, Dow Jones heavyweights McDonald's and Microsoft. If all of this corporate news flow is not enough for US traders to digest, we are also due to receive a raft of US data. The sight of this morning's strong European manufacturing figures obviously raised hopes on the far side of the Atlantic. The subsequent disappointing figures, even with the caveat of the awful weather US states have suffered recently, ensured a soft start to the US trading day.

Manufacturing figures impact metals

Following the contracting manufacturing figures coming out of China last night, the copper price was thumped this morning. However, this negativity has been somewhat counteracted by better-than-expected manufacturing figures from all the major EU powers. Gold has shown its teeth today, with an intraday spike of over $25, comfortably making four-week highs.

Inflation and interest rates in focus for currencies

The Canadian inflation issue continues to put pressure on USD/CAD. For the second day it has been squeezed higher, hitting levels last seen in July 2009. Yesterday’s improving UK unemployment figures might have seen a Bank of England interest-rate decision come a step closer, but it was no more than a small step judging by the muted reaction in GBP/USD today. Yesterday the Bank of Japan swerved from making a decision on interest rates, and USD/JPY fell to the $104 level. Of course, traders will be viewing this as merely delaying the inevitable.

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