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UK markets shine again
The UK market has come back to the fray in fine form today, rising on the back of merger and acquisition activity as it strains to put the volatility of April behind it. However, those with a longer-term view will be carefully eyeing the top end of the current trading range. Since mid-March we have bounced between 6500 and 6700 without establishing any real direction. The activity in the pharma sector is perhaps the first real sign of activity for a number of weeks, but even now 6700 is proving to be quite the hurdle.
US markets reach for skies
The cynics might opine that the market is going up because it's Tuesday, but overall the tone of earnings season has tended towards the positive for the market. Even a miss on both the top and bottom lines for McDonald's has failed to dent the generally positive atmosphere. So far two-thirds of companies have beaten estimates, even if the percentage improvement over expected earnings numbers has not been as bullish as in the past. The market has searched for a positive news story, and this seems to be providing one for now. We are now only another modestly positive session away from seeing 16,600 once again on the Dow Jones, an indication perhaps that this remains a market that wants to go up.
Gold and silver lose ground
Last week’s accord between the major powers on de-escalating the crisis in the Ukraine, along with nervous anticipation ahead of inventory data this week, is pushing US crude lower. We have seen the commodity drop to its lowest level in almost two weeks, testing the $102 area as diminishing tensions in eastern Europe took some of the upward pressure out of the price action. Gold and silver have also lost ground as investors once again check their calendars and remember that Tuesdays mean they must pile into equities. Having stalled at $1330 earlier in the month, we are now about to see whether downside pressure is sufficient to take gold through the April low around $1280.
AUD/USD lower ahead of CPI
Expectations for tomorrow’s Australian CPI figures have helped drive AUD/USD today, with 0.9320 continuing to act as the floor for a continued rally. Higher inflation remains within the expectations of most analysts and the Reserve Bank of Australia, with the central bank unlikely to make any significant attempt in the near future to emulate its cousins at the Reserve Bank of New Zealand. For sterling, Bank of England minutes are in focus, and again no disruption to the steady upward progression of GBP/USD is expected. Some eager souls will even be looking towards $1.70, not seen since mid-2009.