M&S shares up over 4%

Investors seemed to get behind Marks & Spencer today, despite the stock having to contend with a broker downgrade.

M&S ad brings Christmas cheer

Marks and Spencer shares have moved up 4.14%. This coincides with the release of the company's Christmas advert this week, which opens what is commonly a revenue-producing period for the company.

The FTSE, on the other hand, has dropped back towards the 6700 level, weighed on by the financial sector as investors take out profits following yesterday's bumper moves.

Royal & SunAlliance has given a rather downbeat assessment and taken the bottom spot on the index, shedding 6.55%. Past and future bad weather, and the related losses from arising claims, will be likely to see a return on equity for stock below 10% for the foreseeable future.

The fact that the UK service sector is growing at its fastest pace in 16 years has seen the markets scurry to price-in a rate-hike earlier than the Bank of England would like. The higher UK inflation levels, coupled with growth optimism for Q4, has led bond markets to indicate that there will be a hike in rates of around 50 basis points by June 2015.

Dow pulled back by ISM

The Dow Jones saw triple-digit losses in early trade; however the ISM non-manufacturing index beat expectations, bringing the Dow back off its lows. This news does bring with it the possibility of an early taper, which can be construed as equity negative in the short-term. Cisco Systems, despite a target price cut from Barclays yesterday, has seen gains of over 2% and takes the top spot on the Wall Street index. The Dow is now trading 30 points lower at 15,606.

Goldman Sachs made a fairly big call earlier, anticipating that the US Federal Reserve may lower its unemployment rate target to 6% from 6.5%. We can expect many speculative calls of this nature in the coming months.

Gold loses traction

Gold prices have found themselves caught between a rock and a hard place this week, unable to build enough traction to drive through the $1320/oz level as the usual speculation on the Fed’s quantatitive easing taper timing engages the markets. Any drop below the $1300 level will be likely to prompt additional bias to the downside for the metal. The more likely scenario however, given much of the Fed's rhetoric of late, is that we could see a delay in tapering, so any rise through $1320 may bring a return to $1335/oz.

Sterling has a good day

Sterling was the darling of the FX world today, rising through the 1.60 level against the greenback and seeing the 84p level against the euro breached for the first time in over a month. Expectations that the Bank of England will be one of the first Western central banks to blink with respect to rate hikes has made the British pound the best performing G10 currency today. The surprisely good ISM non-manufacturing data has seen the US dollar strengthen.

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