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The day has seen a range of just over 30 points for the FTSE 100, with the 6870-6880 range once again proving too much for the index. Most of the damage has been done by miners, who are down on China concerns and slumping iron ore prices, although banks are decidedly mixed as the market digests the news of a possible jumbo fine for BNP Paribas that has sent shares in the French bank down to eight-month lows.
The FTSE continues to pose a nagging question about its upward progress, and it will have escaped few peoples’ notice that current levels have been followed by swift and brutal selling. Aimless trading cannot go on for ever, and the longer we fail to push towards 7000 the greater the likelihood that another trip to 6500 is in order.
The situation looks a bit cheerier on Wall Street, but even here month end fun and games prevail. Initial losses for the S&P 500 gave way to tiny gains, so once again we can safely say the market touched record highs today.
The Dow Jones remained in the red however, and even a soaring Chicago PMI was not enough to really have an impact. Even so, the ‘Sell in May’ fans will have been disappointed with the month so far, and with the ECB and non-farms next week most traders will head into the weekend confident that renewed volatility lies ahead.
And still the selling in gold and silver continues. It has become almost routine now to see these metals slump, and the drop is doing its bit to take down mining stocks too. The disparity between equity market bullishness and doom-laden commentary in precious metals has becoming starker by the day.
Most rallies in this sphere have been distinctly short-term, and have simply been treated as opportunities for beleaguered longs to get out or for fresh shorts to enter the fray. Based on the loss of $1250, it seems the next stop is $1238.
In oil there seems little sign of the supply risks that have acted as a prop to the price in recent sessions. Unlike precious metals however, there has been plenty of buying appetite over the past week and this provides hope that the new month will kick off in a better fashion for oil.
Both the euro and the pound are doggedly clawing higher on the final day of the week, with house-keeping efforts by traders seeing the dollar shed some ground.
As this week winds down, everyone has focussed their attention on the ECB meeting on Thursday, which has been circled in red as the decisive moment for the euro. Event risk doesn’t come much bigger at the moment, with Mario Draghi needing to step up to the plate if he is to avoid the euro surge against the dollar and undo all his careful efforts to talk the currency down.