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FTSE unable to move past 6850
One word can be used to describe the FTSE 100 today – ‘stalled’. Each time we go towards 6850 the buyers dry up and the index finds itself unable to get any further. Perhaps it’s because it’s a Friday, or due to Ukraine worries, or some poor earnings, but the result is that this is an index without a clear direction. Even a retest towards 6500 wouldn’t signal the start of a fresh bear market, as previous price activity has shown there is still money on the sidelines waiting to come in. So long as 6800 holds, the bias probably remains to the upside, but the bulls’ pre-eminence is wafer-thin.
Dow under pressure
The same can be said of the Dow Jones, which is under some selling pressure today, following on from what was a dismal end to the session yesterday. A mixed session for earnings saw losses for Ralph Lauren and CBS, but Gap and Symantec were on the up. However, the failure to close above 16,600 is perhaps the clearest bearish signal we have seen in a while, and the general risk-off atmosphere has spread to infect all markets. As earnings season winds down, we are still lacking the vital spark to send this market higher.
Gold could retest $1300
Gold and silver have steadied after recent losses, but ultimately there is a lingering sense of disappointment here that Janet Yellen’s testimony didn’t give even a hint of a more accommodative Federal Reserve. For gold we have found a floor just above $1290, some way above the recent support of $1280, which may indicate that a retest of $1300 is on the cards next week.
Brent crude enjoyed a rally this morning, on Libya and Ukraine worries, but this too has succumbed to the usual bout of end-of-week selling. Rangebound trading still predominates here, with bulls and bears having to be content with a few crumbs from each trade.
Profit-taking hits the pound and the euro
Both the pound and the euro are suffering one of their worst days for some time, as profit-taking sets in after both hit new long-term highs yesterday. Given the scale of the upward moves seen in these currency crosses, it was almost inevitable that there would be an adverse reaction in due course, and for the euro the danger was particularly acute. The single currency has seen much of the wind taken out of its sails by Mario Draghi’s suggestion that action will take place in June, while the pound is now heading sharply back towards $1.68, which should provide a foundation of support ahead of UK unemployment data next week.