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Markets start quarter well

Heading into the close, the FTSE 100 is 45 points higher while the S&P 500 looks set to reach new all-time highs.

We’ve barely been able to pause for breath all day, such has been the flood of economic data (and the endless April Fools jokes). However, the quarter has kicked off on a strong note for markets, with Chinese stimulus talk and appropriately soothing words from Federal Reserve chair Janet Yellen helping to lift the mood.

FTSE to play catch-up

In London, the FTSE 100 is looking to play catch-up with US indices after a very good session yesterday, built on the comments from Janet Yellen. The close below the 6600 level yesterday was a worrying sign, but fears of a faltering UK market have been allayed as we set course for 6700 once again, continuing the bounce from the March lows.

The mining sector was in positive territory for a second consecutive day, as investors continued to rediscover their affection for this previously out-of-favour sector. BHP Billiton was the centre of attention, after it declared it was looking at a variety of options to slim down its gargantuan structure. We’ve watched this company bounce around the £17-20 range for the best part of a year now, but a new approach and a more supportive environment in China could provide the boost that has been lacking until now. 

Bearish bets on Aberdeen Asset Management have been put to flight today after it succeeded in confounding expectations and posting better results. A continuation of this move could put the 450p region back in the frame as a price target.

S&P could reach new highs

US markets are on the front foot again, bolstered by Ms Yellen’s comments yesterday that indicated a more dovish approach than had been perceived following the recent Fed meeting. Ms Yellen stressed that the fight against unemployment wasn’t over. Taken with today’s weaker PMI figures from the US, and you have the makings of a decent day’s trading. 

The S&P 500 is currently trading around 10 points higher, and a close above the 1878 level seen at the beginning of March will mark yet another all-time high for this index.

Gold reaching new lows

The equity market rally has left commodities trailing behind. Copper, despite edging back, is still above the $3 per pound level. It’s too early to say that the red metal has finally found a bottom around $2.90, but the news from China is certainly encouraging here. 

Gold continues to see losses, however, touching new seven-week lows, as the emerging market crisis that seemed so dangerous a few weeks ago remains conspicuously absent. The $1280 level might provide a degree of support for the moment, but a break from this signals a retest of the January lows around $1240.

German data lifts EUR/USD

Germany’s manufacturing PMI might have been weaker, but another drop in unemployment in the eurozone’s strongest economy has helped lift EUR/USD back towards the cusp of $1.38. The spike above $1.39 in mid-March aside, $1.38 has proved to be a major stumbling block for this currency cross. Thursday’s data including services PMIs, retail sales and the European Central Bank meeting, will be a key moment to see whether we will revisit the $1.39 level or whether another probe below the 100-day moving average is the next event.

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