Poor data lifts US markets

Heading into the close the FTSE 100 is jumping around either side of 6300, but US markets have been lifted by more bad data that eases tapering fears.

It still feels as if this market wants to go up. In a week that has both the Independence Day holiday and non-farm payrolls there is certainly the opportunity for a summer surge of one sort or another, but the FTSE 100’s tussle with 6300 is getting rather tedious. Hopefully it can push firmly above this level while the Americans have their backs turned and we can then worry next week about whether it has got overextended.

UK markets

Greek worries and nagging fears about RBS have kept the banks down for most of the day. Although it has mostly slipped under the radar, Greece is once again on a collision course with the troika over its bailout. We’d all really forgotten about Greece, to be honest, with our attention diverted by the greater crises in Spain and Italy taking precedence, but the problems in the cradle of European civilisation are still bubbling away and are liable to explode at any time.

More talk of possible splits in the RBS empire have revived fears of government interference, with the share price already under pressure thanks to the abrupt and unwelcome departure of Stephen Hester. Serco however is leaping higher today. Having conquered outsourcing of British public services, it has now set its sights on the good old USA. The company has been looking to put its Olympics debacle firmly behind it, and expanding in the new world is a great way to banish the problems of 2012.

US markets

Yet more weak economic data put a rocket under US markets, showing investors are still opting for the ‘Alice through the looking glass’ policy of taking bad news as a positive sign. After the poor employment number in yesterday’s ISM manufacturing reading, the New York ISM reading slumped to a four-year low. It still looks as if Wall Street has got into the holiday mood early, with the Dow Jones looking to consolidate above 15,000 once again.

Commodities

Commodity investors have had the benefit of two contrasting calls on raw materials, with UBS saying that the supercycle is over and holdings should be cut back, while JP Morgan shifts to ‘overweight’ on commodities for the first time since 2010. Attention is focused on gold, where the latest dead-cat bounce appears to have run its course, with the yellow metal girding up for yet another attempt to crash through $1200 per ounce.

FX

The dollar’s run continues, with USD/JPY leaping through Y100 for the first time in almost a month. This will take some heat off Japan’s policymakers, but once again the solution is not of their doing, with investors shifting back to the US currency as a result of optimism about the world’s largest economy.

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