FTSE clings on to gains

The final hour of trading sees the FTSE 100 consolidating its gains and holding above 6700 for the first time in over a week.

FTSE finds resolve to keep gains

The US open has given the FTSE the resolve needed to cling on to its gains, after it looked rather weak around lunchtime. On a day of little economic data the M&A news in the pharma sector, with Pfizer actively bidding for AstraZeneca, has been a primary driver, although I question how long it can be used as an excuse for increasing exposure to equity markets.

Departing BG chief executive Chris Finlayson will have been comforted this morning by the sharp drop in the share price, but as the day has gone on the buyers have come back in, assiduously closing the gap seen at the beginning of trading. Once the headline news has cleared, the rest of BG’s update will offer little comfort; the new boss will have to get a firm grip if he is to reverse the declining trend in production that has hobbled the share price all year.

Dow within reach of 16,600

The week has started quietly in economic terms, but US markets have nonetheless put their best foot forward, recovering much of the ground lost on Friday. The Dow Jones is, yet again, within easy reach of the magic 16,600 level that has stunted progress a number of times already, while S&P 500 bulls will be wondering if they can squeeze in a rally to 1900 before non-farms throw a spanner into the works. The worry was that new sanctions on Russia might cause investors to keep their powder dry, but it seems that markets are content to let the politicians trade sanctions and rhetoric, as long as it goes no further than that.

Gold and Silver suffer losses

A revival in risk appetite has hit gold and silver, with both registering heavy losses for the day. Gold held above $1280 last week but it seems we are in for a retest of those levels once again. The focus of events will now be on the Federal Reserve meeting this week – no change is expected from this quarter, but any hint that the Fed is nervous about the underlying state of the US economy could see the buyers return. Copper, meanwhile, is building on the impressive session witnessed on Friday, reaching a fresh seven-week high around $3.12 per pound.

USD/JPY close to recent highs

USD/JPY has risen in tandem with equity markets yet again, providing the only real excitement in the FX sphere today. Like equity markets, we are back within touching distance of recent highs, with ¥102.80 marking the highpoint of last week’s rally. Non-farms this week are generally predicted to show a pick-up in job growth in the US, which could provide the needed impetus to see the currency pair touch ¥104 again.

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