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FTSE races through 6600
We rapidly pushed through 6600 this morning as a broad-based rally took hold. The mildly positive finish in the US yesterday evening was sufficient enough to allow the label of ‘Turnaround Tuesday’ to be applied, and the bargain hunters have come back to the market as a result.
Housebuilders, which were particularly badly hit earlier in the week on bubble fears, helped to lead the market higher along with the banking sector. Analysts have been keen to flag up the opportunities still available in the house construction sector, especially given the backdrop of an improving UK economy.
Supermarkets, however, continue to have a tough time, with all eyes on Tesco as it flits around multi-year lows just above 280p. Morrisons has dropped back towards 200p, a sign that investors still do not have much faith in its new long-term plan.
FOMC minutes check gains
US markets have tentatively added to their gains so far this afternoon, but the Federal Open Market Committee minutes will keep gains in check. Officials have gently encouraged the expectation that no rate rise will occur until 2015, so any deviation from this line in the minutes could throw markets into reverse, sacrificing the gains achieved today.
Alcoa has made good progress following its results, up 4% and above the $13 mark, so this is at least one uptrend that remains intact. Recent equity market turmoil will have hurt recent entrants to the bull market, but there is a good number out there who currently view the latest turmoil as the latest chance to increase their equity exposure, FOMC or no FOMC.
Brent's progress stunted
Brent crude has run right into the $108 level that stunted its progress in the final week of March. Earlier, we had seen some weakness creep back in to this commodity following news that several Libyan terminals that had been taken over by militia might re-open. Now that this might be delayed, the price has begun to gain further but $108 appears to provide a barrier for now. Although the situation in Ukraine has been off the agenda today, further rumblings in the east will only act as a means of driving oil prices higher.
Euro gaining ground on US dollar
You have to marvel at the power of central banks. The European Central Bank has started talking about the possibilities inherent in quantitative easing and negative interest rates, while the euro continues to gain ground against the US dollar. The short-term slump in this currency cross appears to have run its course, and puts us back in the realm of a strengthening euro, a trend that has been running for more than 18 months now. The timing of Greece’s return to public bond markets could not be sweeter – at least if the ECB fired up a QE programme they wouldn’t be short of choice.