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FTSE loses its momentum
The day has seen the FTSE 100 shift between gains and losses, and although we’ve touched 6650 a number of times during the day it appears that forward momentum is distinctly absent from the picture.
The rally in gold and silver has helped stocks like Fresnillo and Randgold, but the soft figures from China mean the rest of the sector is out of favour. Overall, it seems we’ve run out of steam for now and there is no clearer demonstration of this than in the price action of WHSmith and Marks & Spencer. Both companies have suffered sharp falls on the day they released results that were initially warmly received.
NASDAQ looking unhealthy
US markets are back in the red, but the losses are being kept in check by the knowledge that bank earnings season is just around the corner. Once again, however, the NASDAQ is looking distinctly unhealthy. Now the excitement from the Federal Reserve is out of the way, attention turns back to economic fundamentals and on this basis the situation is less rosy.
Chinese data is still weak, and what little impact there was from the recent mini-stimulus announcement has now firmly worn off. In the clash between the optimists and the pessimists it still isn’t clear who has the upper hand. One thing is for certain – US earnings season will provide plenty of volatility, and to aid clients with this IG has provided extended trading hours for 24 important stocks that will be the focus of major attention in the weeks to come.
Gold holds above $1320
The Fed minutes have given the green light to gold and silver, which have both rallied yet again thanks to the change in expectations regarding US interest rates. We have seen some profit-taking creep in during the afternoon, but despite this gold has clung on above the $1320 level. Once again silver is striding ahead of gold, but $20.30 appears to be the limit of its ambitions for now. Equity markets have been decidedly lacklustre this afternoon, but a better earnings season might give them a lift and take some of the shine off the precious metals.
Aussie boosted by strong employment report
Although off its highs, AUD/USD continues to enjoy an impressive day taking full advantage of the weakness in the US dollar. A strong employment report earlier in the day has done its part too, supporting the view the Australian economy is continuing its shift away from excessive dependence on the mining sector. However, the currency pair has now run into resistance around $0.9450 and is now looking a fraction overbought, meaning it may be difficult to sustain upward progress as the weekend nears.