Risk-on FTSE pulls back losses

Heading into the close the FTSE 100 is up 50 as talks between Ukraine and Russia are slowly but surely making progress. 

City of London
Source: Bloomberg

European equities lead the way

The FTSE 100 has pulled back the ground lost at the tail end of Friday’s trading session, as the relationship between Russia and Ukraine remains strained but has improved, and with that a comes a more risk-taking attitude.

European equities are leading the way, as there is a growing sense that it is now safe to get back in the water. The downbeat update from the Bundesbank has sparked speculation that the European Central Bank will ramp up monetary easing.

Bovis Homes is up 5% after the homebuilder registered a record number of completions, a triple-digit increase in profits and dividend ensured high demand for the stock. Persimmon which reports tomorrow has a lot to live up to.

The Irish banks have benefited from Fitch’s restoration of an A grade rating to the Irish economy, but being willing pay off your debts and actually being able to repay creditors are two different things. 

Quiet day sees Dow follow eurozone

In the US, the Dow Jones is up 153 points at 16,815; US equities are being dragged higher by their eurozone counterparts as there is little in the way of corporate news or economic announcements. The VIX has lost over 4% in today’s session which says it all. 

Gold stuck at $1300

Gold remains in Groundhog Day, as the precious metal seems to be magnetically drawn to the $1300 level. The rebound in equities has eroded demand for gold but all eyes remain on Moscow. Oil continues to slide as the American-backed Kurdish forces continue to stem the control of Isis. Constructive talks between Ukraine and Russia have led to dealers being less fearful about supply issues.

Bundesbank update causes concern

The Bundesbank has conceded that instability in Ukraine could hamper the German recovery; it will be difficult for the strong man of Europe to do a U-turn on negative growth while tensions run high in eastern Europe. The euro came under pressure today after the warning from the German central bank.

Sterling has started the week on a positive note; traders are hoping that at least one member of the Monetary Policy Committee will vote in favour of increasing rates; even one hawk would put the cat the among the pigeons.

The information on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG Bank S.A. accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it and as such is considered to be a marketing communication.