Investors focus on growth of US economy

As both France and Germany have enjoyed bank holidays, European equities have understandably had a particularly lethargic feel to them today.

US flag
Source: Bloomberg

FTSE sees encouraging movement

Merlin Entertainments has conjured up some impressive figures, boosted by high footfall at its Legoland Parks with the recent box office success of The Lego Movie helping European tourists make the most of the good weather.

The standout performer in the FTSE 100 has been 3i finally feeling the benefits of its three-year company restructuring operation.

Telecoms company TalkTalk has increased its revenue forecast following an encouraging start to 2015 as TV, mobile and broadband sales were all showing signs of moving in the right direction.

Considering the FTSE has had 12.6 points taken out of it with a number of companies going ex-dividend, Sainsbury's and GlaxoSmithKline among them, the day's moves are that much more encouraging. European equity markets might well have been open today but with bank holidays in both France and Germany, trading volumes were always going to be a little bit lower.

Bank of England governor Mark Carney has gone on today to give a little more clarity to yesterday’s inflation report, and his eagerness to see a referendum on the UK’s continuing status in the EU conducted 'soon' has focused the markets' attention. 

Reporting season winds down

The US Department of Labor’s monthly release of the latest producer price index has badly underperformed, not only failing to meet expectations but showing contraction as well. It will be interesting to see how the markets take this continuingly disappointing US data. The softer the figures, and the longer this continues, the less likely we are to see an interest rate rise materialising in Q3.

Making matters worse is the fact that we are now at the end of the reporting season and with the absence of corporate data to distract them, investors are even more focused on the pace of the US economy's growth.

Oil prices higher

The squeeze on the dollar has sent gold climbing higher but gold bugs would do well to keep calm. As impressive as this move has been up to the $1220 region, the precious metal still remains within a range it has been unable to break above since back in April.

Oil prices have crept fractionally higher and despite the absence of any action or strong comments from OPEC ministers, or more importantly the Saudi oil minister, it looks to be comfortably hanging onto these current levels.

GBP/USD claws back pips

Partially driven by woolly comments coming out of the Federal Open Market Committee, and partly by a backdrop of underperforming and wholly unconvincing economic data, we have seen the dollar give up even more ground today against both sterling and the euro.

GBP/USD has clawed back 1,200 pips since mid-April and is now enjoying the rarefied air last seen some six months ago. EUR/USD is also enjoying a run higher, a move the more cynical-minded would say has been triggered by a plethora of institutional notes released from the banks outlining their expectations that parity was just around the corner.    

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