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Republicans have majority
In London, the equity market breaks through the 6500 mark as traders take their cue from the US market. Now that Republicans have a majority in both the House of Representatives and the Senate, dealers are anticipating reform at the Federal Reserve. The Grand Old Party want to move away from the wishy-washy 'wait and see' attitude of the Fed, and introduce a more scientific attitude to deciding interest rates.
Marc Bolland, CEO of Marks & Spencer, will certainly remember ‘the fifth of November' as it was the day he showed traders that his turnaround plan was working. Mr Bolland pulled it out of the bag at the last minute as the market was expecting a drop in first-half profits. Traders were stunned when profits actually rose, sending M&S shares up by 9%.
IG is offering a grey market on the expected value of Virgin Money, which is set to float soon; our market indicates a market capitalisation of £1.5 billion.
Dow at 17,438
In the US, the Dow Jones is up 54 points, at 17,438, as Wall Street has welcomed the return of a Republican-controlled Senate. President Obama may have the top job but traders know that Republicans run Capitol Hill.
The dramatic shift from blue to red has put the US equity market in the black today. Shares in Time Warner Inc have ticked higher after the multimedia giant’s earnings trounced analysts' estimates. The owner of HBO has hammered out a plan to cut costs which includes trimming the headcount. Time Warner’s board is under pressure to add value in the wake of walking away from Rupert Murdoch’s offer in August.
Gold struggles against strong US dollar
It has been a brutal day for bullion as traders struggle to offload the metals fast enough. Both gold and silver have fallen to four-year lows. Gold is in the gutter; the precious metal isn’t looking so precious these days, and a powerful US dollar is putting pressure on it yet again.
US dollar on the up
The greenback has left other currencies green with envy as the US dollar surged ahead in the FX market after the GOP grabbed control in the Senate. Now that the Republicans rule the roost in both the Senate and the House, President Obama wouldn’t be blamed for spending more time on the golf course.
Republicans have pledged to shake things up at the Federal Reserve; the GOP would like to see a more mathematical method in determining interest rates and a focus on inflation over unemployment as the benchmark in moving interest rates.