FTSE's momentum wanes
The morning session in Europe saw the FTSE attempt to finally break the 7,000 level before running out of steam. Now that the FOMC has shown its hand and the eurozone quantitative easing scheme looks to be returning results, the bulls should feel free to run riot. Although the FTSE has a tendency to lag behind its European counterparts, this lethargy should not prevent it from ultimately setting higher highs.
Greece continues to be the little black cloud ruining the European skyline, and Syriza’s determination to start verbal jousting with the Germans at every opportunity is more than just a little troubling. So far the only change of heart it has managed to achieve is with German opinion polls, which were only 40% in favour of a Grexit two weeks ago but has now increased to 59%.
Next might have posted figures that show why its shares have increased by 19% in the last year, but the accompanying guidance for the year ahead saw all of that positivity knocked out of the share price by the market. Next’s fall by almost 4.5% has just kept British American Tobacco's name off the top of the list.
Although BATS is used to fighting court cases around the globe, the creation of a new third world nation fighting fund of $4 million, by US philanthropists Bill Gates and Michael Bloomberg, will send panic around the boardroom as Mr Gates and Bloomberg’s pockets are considerably deeper than just this initial contribution.
US markets await Nike figures
As expected the word ‘patience’ was removed from the Federal Open Market Committee’s statement; however, the accompanying phraseology more than made up for its absence as Janet Yellen ensured there were ample replacements for that key word.
The initial reaction may have seen a correction in currency markets, but two 25 basis-point rises before the end of the year still appear to be factored in by the markets. Unemployment and inflation levels have maintained their status as the key barometers, so although the word patience might have been missing it was still evident in the FOMC’s thinking.
Tonight will see Nike report its third-quarter figures, and this might be an interesting indicator as to how badly the dominant dollar might be affecting US exporters. The ‘currency headwinds’ excuse so commonly used by European corporations over the last nine months might become more commonplace with US companies.
Brent's bounce short-lived
Yesterday’s moves in the dollar looked to have triggered a bounce in oil prices, with both Brent and US light bouncing higher. This move, however, has been short-lived as the dollar has once again regained its authority. Gold, too, fleetingly enjoyed a respite from the negativity, but this optimism has been quickly quashed.
Cable sellers return
Following last night’s statement from the FOMC and Janet Yellen, the markets initial reaction was to see the dollar give back some of the gains that it had been enjoying over the last few weeks. Now that the markets have had time to digest the statement we are once again seeing currencies sell off against the dollar. This short-term blip looks to have been an opportune moment for EUR/USD and GBP/USD sellers to come flooding back into the market.