This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Miners lift FTSE
Miners make up the majority of equities on the FTSE leader board today as speculation that fresh impetus could be triggered by Chinese intervention. This has breathed fresh life into this sector and over half of the FTSE’s move can be attributed to the miners.
A new week has seen a new M&A story break, with news that BSkyB is now in discussions with Sky Deutschland and Italia over the possibility of a €10 billion tie up. Although this has long been something that Rupert Murdoch has desired equity markets were a little less enthusiastic, selling off BSkyB shares and seeing them down by more than 2.5%.
After RSA implemented a 1 for 5 stock consolidation, the opening auction for the equity was thrown into some confusion; however this was swiftly rectified.
Following the publication of its latest figures, Lonmin has seen renewed troubles because of the $164 million cost of miners' strike action, meaning that more job cuts look inevitable. With no end to these troubles evident, todays 4% sell looks unlikely to be the last.
Away from the markets, voters look to be using the European elections as an opportunity to shake the major political parties into action. The IG binary bet shows that UKIP, the party that creates a very polarised opinion with voters, stands a 67% chance of coming away from these elections with the most seats, confirming what opinion polls are showing.
Dow looks to set new highs
The Dow Jones has started the week the way it finished the last, with the bit between its teeth and looking to set new highs. Any fears that an after reporting season lull would set in to tempt the 'sell in May brigade' are swiftly being set aside. Seeing the Dow close above the 16,600 level would go a long way to easing any fears the bulls might have, and with an absence of economic data Monday could well be the day for that.
The pessimistic swing that traders have had with the technology sector has seriously dented the market cap of many residents of Silicon Valley. This lack of faith does not appear to have tarnished the optimism for China’s Alibaba and its looming IPO, as the IG grey market still suggests a company set to be valued at $200 billion.
Copper price jumps
Early trading inferred that gold was set for a mild day of decline, but a flurry of activity in the late morning triggered the bulls back into action after it once again crossed above $1300. Both Asian and European traders have helped force gold through the 100- and 200-day moving averages, but expecting US investors to follow suit might be a step too far.
Once again speculation has increased that Chinese stimulus is on its way and copper has been quick to react after the spot price jumped by 2.25%, fuelled by hopes of renewed demand from the Asian powerhouse.
GBP/USD buyers return
A scarcity of economic data published today had set the tone for a slightly more reflective currency market, but with the CBI stating its belief that UK interest rate rises would be brought forward to the first-quarter of 2015, this triggered the GBP/USD buyers back into the market.
The end of last week saw a flurry of activity in EUR/USD, but judging by the inactivity in today’s market traders must still be suffering from the excesses of watching this weekend’s Eurovision.