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Markets rebound after a sluggish morning

Heading into the close the FTSE 100 has shaken off its morning sluggishness and has recovered the 6800 level, as US markets rebound.

AstraZeneca shares rebound

A sharp about-turn in US markets has dragged the FTSE 100 higher, although with only a 0.2% gain it is sulkily refusing to take part enthusiastically in the rapid return of risk appetite.

AstraZeneca shares continue to be the prime mover in the market, rebounding today thanks to renewed talk that the Pfizer bid might not be dead. But with just five days to go until it must give up on the bid, it seems unlikely that Pfizer will return to the fray for another try while AstraZeneca’s board is striking down bids out of hand. Far better to wait and let discontent build among shareholders, then take advantage in six months time. 

Traders await Fed minutes

The see-saw action in US markets goes on, as today sees indices bounce back from what seemed like cataclysmic falls yesterday. This type of market action produces much sound and fury, but ultimately signifies little beyond the realisation that the market is unable to make up its mind. Of course, it is Federal Reserve minutes day, so all price action should be taken with a pinch of salt. If the minutes even hint at a tilt in the direction of a more hawkish view, then tomorrow could easily see markets break through the lows of the week, while conversely some form of dovish commentary could put them back on track for the recent highs.

The big news of the day is in eBay, which is bucking the positive trend after revealing a cyber attack on its database. With Alibaba gearing up for its IPO, this kind of news is anathema to the company’s share price, and will leave the US auction site struggling to keep its crown. 

Copper drops over 1%

It appears someone has pulled the rug out from underneath the rally in copper, as the red metal drops over 1% to its lowest level in over a week. However, given the evident increase in Chinese buying of the commodity, this is likely to be more short-term profit taking than the start of something sustained. The rise in oil prices has continued unabated, however, aided by the general turnaround in risk sentiment in markets.

US crude in particular has recovered a rising support line, leaving open the possibility of a retest of $104 towards the end of May.

EUR/GBP touches fresh lows

EUR/GBP has touched fresh lows for the year, as the beauty contest between the euro and sterling leaves the euro looking distinctly the worse for wear. The move will have those planning a trip to the Continent this summer rubbing their hands in glee, but it has a firm basis in fact, when the Bank of England seems to be tiptoeing towards a more hawkish stance (however reluctantly), while the ECB, with equal reluctance tries to shuffle towards some form of monetary easing.

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