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With Syria continuing to dominate headlines, it was always going to be tricky for markets, especially in Europe, to make progress. Fortunately China news has given a reason for optimism as the autumn weather descends on London with a vengeance. Still, we are in the month of tapering (apparently) so expectations will only build from here.
Signs of life in China failed to buoy the mining sector in any meaningful fashion, with the sector showing a distinctly mixed performance. Rio Tinto and Anglo American were in the ascendant, but BHP Billiton and Antofagasta refused to join in the general rejoicing among raw materials firms. Sentiment was hit by a sharp drop in BG Group shares, as the firm warned that troubles in Egypt would hit production while its Norway efforts would not bear fruit as early as hoped. The company’s protestations of better times to come fell on deaf ears, and the shares lost 5.3%.
US markets seemed content to not over-analyse Friday’s non-farm payrolls, which (depending on your view) either strengthened or weakened the case for tapering this month. Instead, we saw gains across the board as indices got off to a good start for the week. The NASDAQ pushed out to its highest level since November 2000, helped by Apple, as the tech giant mounted its latest attempt to push and hold above $500 per share. Economic data from our cousins across the pond is lacking until Friday, so direction may well be absent until then.
Brent crude has come off slightly today on an easing of tensions around Syria. It appears the Russians might try to put some pressure on Damascus to abandon their chemical weapon stockpiles. The US Congress will vote later in the week, so we could continue to see heightened volatility in oil as the commodity is buffeted by headlines.
The chancellor gamely appeared in front of the UK press corps today to suggest that the UK is turning a corner. Sterling has been given a lift by this and by activity in US Treasury yields, but Mark Carney will probably be hoping that Mr Osborne doesn’t warm to his theme, given that ‘steady as she goes’ is the current mantra at Threadneedle Street. GBP/USD is now looking to push firmly beyond the mid-August highs, as optimism about the UK builds once again.