UK benchmark oscillates around 6300 level

An absence of economic data saw the UK benchmark spend most of the day oscillating around the 6300 level, with thin volumes demonstrating the lack of market desire to commit to direction ahead of next week’s FOMC meeting.

European markets

Weak US data did help to keep the bias to the top side of the tight trading range.

Today saw yet another batch of bad news for the already put-upon banking sector, with the likes of RBS, Standard Chartered and Barclays amongst twenty banks called to task by the Singapore central bank on suspicion of interbank rate manipulation. Additional reserves will now need to be set aside by the implicated banks and, while the markets did not punish share prices on the revelation, the reputational damage may be far-reaching.

US markets

With European markets holding fire in advance of what were mostly disappointing US economic data releases, the usual service of ‘bad news is equity positive’ may have kept markets from falling lower, as concerns over stimulus-easing waned slightly.

The US current account deficit widened to $106.1bn against the expected reading of $109.7bn. A marginal increase was expected yet US industrial production, which has struggled to rise to the occasion since the beginning of year, remained unchanged in May; thus highlighting the slowdown in US manufacturing for the second quarter. Auto-related production was the one exception, rising 0.7% in the month. The downward revision for US growth from 3% to 2.7% for 2014 as part of a downbeat assessment from the IMF could not be ignored and was the catalyst for US indices sinking lower.

The assertion that big-scale asset purchasing will be necessary until at least the end of the year may ultimately be a boon for risk assets once the dust settles.

Shares in Groupon rose by almost 13% as Deutsche Bank analysts raised the price target from $6 to $10 as a result of the increased focus on mobile apps.

The Dow is currently trading at 15113 down 62 points on the day.

Commodities

Supply worries as a result of escalating tensions in Syria, and the continued weakness in the dollar, helped drive WTI oil contract through the $98/bbl level for the first time in nine months. From a technical perspective, despite growth concerns globally, there is potential for a higher price for the commodity over the medium term.

FX

The US dollar continues to underperform and wobble, falling below the 95.00 again against the yen. The euro has seen a rise against the greenback for three consecutive weeks; traders are now clearly taking profits ahead of the 1.34 level. Once again, the FOMC meeting next week will be a deciding factor.

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