This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
After so many consecutive slides, a relief rally was expected at some point. While today’s gains are sold rather than outstanding, the gains are broad-based, with two stocks gaining for every losing one on the New York Stock Exchange.
After a dodgy start, earnings are starting to come good – 30% of the S&P 500 companies have reported for the last quarter so far, with around 69% having beaten estimates for earnings, with a similar percentage surpassing forecasts for revenue. That should help the market to keep some of today’s momentum going, especially with risk-aversion starting to abate, as emerging market currencies begin to recover from last week’s steep falls.
The FOMC began its final meeting under the stewardship of Ben Bernanke today, with an announcement to be made tomorrow at 7pm GMT. Based on recent comments made by some centrist officials at the Fed, there is a fair chance of a further reduction to stimulus. Given the choppy week we had last week, the weak unemployment figures in December and no big pick-up in inflation, I would not be too surprised if the committee defers another taper for now though. Certainly, I expect forward guidance to remain very accommodative.