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The traditional sleepiness ahead of non-farm payrolls was very much present in markets today, with the FTSE continuing to display heightened skittishness around the 6800 level that has held such a fascination so far this week. With little change signalled from the Bank of England and the European Central Bank, the market is now looking towards tomorrow’s US job numbers to provide some much needed excitement.
Aviva and Schroder come out trumps
Company results have been the driving source of news flow today, with some strongly received and others being cast into the outer darkness. Examples of the former would be Aviva and Schroders, with Aviva seeing profits come in ahead of forecasts, while Schroders was able to boast of a substantial increase in wealth management activity, due in no small part to the absorption of Cazenove Capital Management. A rising tide lifts all boats, but asset management firms will be particular beneficiaries of the seemingly relentless rise in equity markets; Russian interventions notwithstanding.
Engineer IMI was not able to bask in the sunshine, however, after cautioning that margins would be lower in the first half of the year. In addition, a strengthening pound will take its toll, as the rising currency makes IMI’s exports less attractive in overseas markets.
US markets await NFP
For the S&P 500, today has already witnessed another intraday high, as the index shrugs off the Ukraine worries of earlier in the week. US indices are booking in modest gains, helped on their way by a strong reading on initial jobless claims, which declined by 26,000 to 323,000. However the look forward to non-farm payrolls is not particularly optimistic, given the weak ADP report yesterday and knowledge that the implications of difficult weather in February is that job creation may well be weak. Even with Friday still to go, a 1.6% gain so far this week is impressive, and certainly will dispel the expectations of those that thought the Ukraine crisis would provoke another emerging market-related selloff.
Gold maintains rally for now
Gold has enjoyed a strong day, making another move in the direction $1360/oz. If it can maintain the rally then we are looking at the strongest quarter for the yellow metal since 2007. It is certainly the case that the outlook seems more propitious than it has done for some time, especially if the Ukraine-Russia stand off extends into April.
EUR/USD smashes $1.38 resistance
Low inflation has not been enough to shift the ECB from its current immobile stance, confounding those who thought the difficult situation in parts of the eurozone would spur some sort of policy change. Indeed,
President Mario Draghi struck a more positive tone, and this has emboldened EUR/USD to push to a high for the year, smashing through $1.38 again and breaking through a declining trendline that has persisted since the summer of 2008.
Sterling remained little moved after the Bank of England’s meeting today, leaving the long-running trend of a strengthening pound unchanged.