Dow edges lower following weak housing data

Heading into the close the FTSE is in negative territory as the banking sector leads the market lower. 

Wall Street sign
Source: Bloomberg

Banks lead FTSE lower

London-listed banks that have a large exposure to the Far East are doing the most damage; HSBC and Standard Chartered are keeping the London equity market in the red. The British banks that weathered the credit crisis relatively well have lost the most ground today. HSBC kicked off reporting season for the UK banks and the poor results triggered a wave of selling of Standard Chartered shares as it also has a big dependency on Asia.

Eurozone stock markets are outperforming their British counterpart for a change as traders are hopeful of a deal being struck over Greece.

IG is offering a binary bet on the outcome of the UK general election, and it is indicating that there will be no overall  majority and that the Conservatives will take 290 seats. It also suggests there is a 79% chance of a hung parliament and an 18% chance of a Conservative majority.

US home sales at nine-month low

The Dow Jones is offside as US existing home sales dropped to a nine-month low in January, and this has raised concerns over the US housing market. Even though the December figure was revised higher the market was worried about the lack of supply at the start of the year. The Dow has been in a steady uptrend since the start of the month, and today’s disappointing housing data was the perfect excuse to take profit.

Janet Yellen’s testimony before the Senate Banking Committee in Washington DC tomorrow and Wednesday will be the highlight for traders as far as the US market is concerned. The situation in Greece will play a small role in the US market but it is unlikely to cause a major stir.

Gold edges higher

Gold has crept above $1200 again as renewed fears about Greece led to traders seeking a safe-haven asset. The $1200 level is a major psychological level for the precious metal, and any time it dips below the price there is a barrage of buyers waiting in the wings.

The copper market is subdued as the Chinese celebrate the Lunar New Year, and the metal has been trading sideways for the past six weeks as traders adjust to the fact that the boom years are over in China.

Oil has taken a dive again as the upward correction that began at the beginning of the month has run out of steam.

Euro under pressure

The euro is coming under fire again as Greece rushes to come up with a list of economic reforms that will satisfy the European Central Bank and receive the loan extension it desperately needs. The left-wing Syriza party is going to have to change its tune if it wants to be granted an extension to the existing bailout that is due to run out at the end of the month. As long as the clock is ticking for Greece, the single currency will feel the pain.

The pound has pulled itself back above the $1.54 mark as sterling is seeking a repeat of last week’s surge against the dollar.

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