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Although copper prices have bounced slightly today, the drop through three-year lows yesterday unnerved markets. Throw in some headlines about Russian movements in Crimea, and you have the recipe for a continuing selloff.
IPO day in London
It might be IPO day in London, but that hasn’t managed to hold back the selling witnessed on the FTSE 100. London’s leading index briefly slipped below 6600 around lunchtime, as the market declined for a third successive day. Mining stocks broadly managed to follow copper higher, but it was the turn of the banking sector to drag the market lower. Good news appeared in the form of Prudential’s results, as the market-beating company reported yet another rise in profits and a welcome boost to the dividend. However, G4S was unable to provide a similar positive tone, as it slumped from profit to loss.
It would be remiss to leave out the performance of the newcomers, as both Poundland and Pets at Home emerged into the frequently unforgiving world of publicly-listed companies. The former raced higher, nearing 400p at one point before settling back nearer 380p, still over a 25% surge, but the latter was left trailing behind, declining 3.6% to 237p. Both companies have ambitious growth plans, but they will need to make the right noises on growth if they are to receive support. Tesco has shown the danger of losing a reputation for good performance, and an uncertain start now would take years to shake off.
US markets attempt push higher
US markets have striven to push higher this afternoon, after the biggest decline yesterday for the S&P 500 in over a week. For the moment, however, their efforts have met with little success.
News of the King.com IPO, which is pricing in the range of $7.5 billion, reminds us that there is plenty of activity on the IPO front in the US as well.
On Wall Street we are also feeling the impact of China, after the recent corporate default and weaker trade data, and now we look to tomorrow’s industrial production and retail sales for signs that the world’s second-largest economy is still on track.
US plans oil release
Crude oil has taken centre stage this afternoon, after news that the US is planning the release of five million barrels from the Strategic Petroleum Reserve. It might be a drop in the (oil) ocean, but it does perhaps signal a willingness by Washington to take economic steps that will put pressure on Russia over its actions in the Crimea.
The boost in Ukraine tensions has seen gold rise again, pushing through $1360 to its highest level since last September and throwing open the possibility that we might see further gains in the direction of $1400.
EUR/USD is making tentative steps towards breaking above $1.39, as it looks to build on the rally of last Thursday following several days of relative inactivity. If it does hold here $1.42 would be the next line of resistance, which was last seen back in October 2011. Tomorrow’s monthly report from the European Central Bank and Friday’s German consumer price index will help determine whether this latest bounce can be sustained.