US stocks higher as FTSE drops

It’s a mixed end to the week, with UK and European indices down and US stocks broadly higher. The FTSE 100 is currently down half a percent, in line with losses in Europe.

London skyline
Source: Bloomberg

Miners under pressure

Jilted pharmaceutical firm Shire came out with all guns blazing this morning to prove that it is perfectly capable of carrying on life as an independent firm without AbbVie. This morning the market thought that the lady doth protest too much but the afternoon has seen a turnaround with the share price moving back above £40 to stand around almost 4% higher on the day.

Miners are under pressure thanks to the weak Chinese property news and the diminished outlook for raw materials demand that this suggests, while other names such as BP and Next are merely seeing a booking of gains after bouncing along with the rest of the market this week.

The weekend should see the publication of the European Central Bank’s stress tests on eurozone banks, and the central bank will be under pressure not to let any of the institutions off too easily. However given the large short positions existing in many of the region’s banks we could see an impressive rally in coming weeks if the tests show that the sector is relatively healthy.  

Ebola fears still current

News of a fresh Ebola case in the US and rumours of another made for a choppy opening on Wall Street but for the moment indices are holding their ground, with the Dow Jones still above 16,700.

UPS and Procter & Gamble earnings provided reason for optimism, while new home sales were a mixed bag, rising in September to a six-year high but heavy revisions meant that the positive impact was limited.

Optimists can still be pleased with their work in carrying on the equity rally that began in the preceding week, although nerves will build ahead of the Federal Reserve meeting next Wednesday. A fairly dovish outlook that concedes the risks of a premature rate increase and extols the virtue of looser policy should be well received by investors. 

Gold holds above $1230

Oil prices have been knocked sharply lower again this afternoon, giving back around half of yesterday’s gains. So far most OPEC participants are keeping quiet on their negotiating positions, so while today’s down day reverses some of yesterday’s positive momentum the overall trend is likely to see Brent retesting the $87 level in short order.

Gold meanwhile is holding above $1230, with buyers stepping in to end the week on a better note. However, the retreat from $1250 will probably be an extended one, with a preliminary target around $1222.

GBP/USD rallies see selling

UK GDP came in line with expectations this morning, giving the pound a lift, but the UK economy is going to have to do a lot more than just meet expectations if it is to change the perception that the Bank of England has put its plans for a rate hike back in the safe. Rallies in GBP/USD have been an excuse for selling, so any move back towards $1.62 next week is going to produce the same effect.

German IFO data and the bank stress tests next week will mean that euro watchers will have a busy start on Monday, and while the $1.26 level is holding for now the pull of economic gravity is going to take us back to the October lows as more bad news emerges. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.