US markets see losses after record highs

Heading into the close the FTSE 100 is creeping towards positive territory, although the US session has witnessed some losses following fresh record highs.

FTSE recovers from morning losses

As the trading day winds down in London the FTSE 100 has recovered from the morning’s losses and seems intent on actually closing up for the day. The recent selloff has had the effect of tempting some investors in off the sidelines, helped by the general improvement in economic outlook. Although the index is international by disposition, it will hardly have escaped the notice of traders that the Bank of England was cautiously upbeat in its inflation report today, even if it still thinks there is slack to be eliminated before a rate increase becomes a realistic prospect.

Profit-taking in Compass has pushed the shares back below £10, but in the longer-term this particular strong performer should continue to find enthusiastic buyers, especially given its exposure to growth in emerging markets.

AstraZeneca and Pfizer have been mostly off the radar today, but the IG binary market on the subject is still leaning towards an eventual successful outcome for Pfizer.

US markets poised for further gains

A general absence of major news in the US left markets without a reason to capitalise on yesterday’s record closes for the Dow Jones andS&P 500, but the advantage now clearly lies with the bulls. 16,600 has been broken as a major hurdle, and if the S&P 500 can repeat the feat and climb to 1900 the picture will look even rosier. The action today was always likely to be of the consolidation variety, but with Cisco after the bell tonight, and then economic data tomorrow, markets are still poised for further gains over the next month.

Gold and silver see volume buying

Gold and silver have both seen buying in some volume today, thanks to commentary from the Bank of England that, while not particularly dovish, is certainly not hawkish in tone. The Bank still thinks there is ‘some way’ to go before the slack in the British economy is taken up, and this has given a signal to traders to push precious metals. But while both remain stuck in their current ranges, the signal is an amber ‘proceed with caution’ instead of a green ‘full speed ahead’.

US crude is still on track for three-week highs, as recent suggestions by US officials about a lifting of the export ban continue to make their presence felt.

Sterling sheds ground

Sterling traders have barely been able to pause for breath today, with first unemployment figures and then the Bank of England’s inflation report. The currency shed ground against the dollar and the euro due to diminished expectations for a rate hike early in 2015. The bank believes the UK economy is heading back to ‘normal’ – whatever that might be – but, like his counterpart in the US, Mark Carney is staying firmly tight-lipped about when the first rate increase will come. He knows that to do otherwise would restrict his freedom of movement. Sterling is near a three-week low, but more good UK data, in line with the current trend, will tempt the buyers back in, increasing the pressure on Threadneedle Street to do something.

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