Markets lack impetus to rise

With a light calendar in terms of corporate or macro data releases, equity markets lacked any real motivation to move higher today as the spectre of the US debt-ceiling negotiations and potential gridlock spooked investors.

European markets

The UK has had its fair share of positive news of late, and the British high street now looks to be a beneficiary. UK retail sales rose at the strongest pace in 15 months in September, according to the CBI. We will need to see a corresponding leap in consumer confidence if this trend is to continue.

Helping to cap gains too were Labour Party leader Ed Miliband’s comments yesterday. His promise to freeze gas and electricity prices, subject to being elected, has effectively rendered the utility sector helpless to a swift sell-off. Among the top decliners were Scottish & Southern Energy and Centrica, which fell 6% and 5% respectively.

The woes for Carnival shareholders also continued today, as the cruise operator was subjected to no fewer than three broker downgrades in light of yesterday’s profit warnings. The shares sank over 7% today, adding up to a 14% decline over the past two days.

The mining sector has had something of a volatile quarter. Fresnillo has threatened to fall below the £10 per share mark but is clearly seeing bargain-hunting at this level. The stock is up 3.66% today.

US markets

US indices have all but given up the gains made in the immediate aftermath of the zero taper from the Fed last week. As the S&P 500 seems to have ceased its recent gyrations around the 1700 level, it is now clear that a fifth consecutive day of losses for the key US benchmarks is on the cards.

Durable goods orders in the US edged slightly higher on the month against a flat expectation, with car demand once again forming the backbone of the overall gain. Given that manufacturing output has been trailing the likes of the retail and service industry, the fact that durable goods beat expectations suggests that manufacturing output is due an additional boost.

New homes data was certainly a vast improvement on July’s figures, which saw demand slump by 14.1%. US home sales in August increased by 7.9% to 421,000. This was slightly better than the economists’ estimate of 420,000.

The Dow is trading fairly flat at 15,343.

FX

The pound broke higher today on the back of the stronger retail sales in the UK. The Bank of England said that recovery is 'taking hold', and has increased its growth forecast for this quarter from 0.5% to 0.7%. As long as we see the pound remain above the 1.6050 level, a retest of the recent highs is likely to be on the cards.

Commodities

Gold has made a decisive move to the upside this afternoon. Having spent most of the week oscillating around the $1320 level, the push through $1333 suggests that investors are becoming slightly more risk-averse.

The focus is still on the Fed and whether or not it will look to trim its stimulus package at its next meeting. If there is an increase in speculation that the Fed will taper the scheme, we could see gold slip below $1300.

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