FTSE down while US indices rally

Heading into the close the FTSE 100 is still down 40 points, although markets in Europe and the US are looking brighter.

Source: Bloomberg

Morrisons shares up 20% from 2014 lows

Overall the tone on equity markets still looks firmly negative but we have seen a firm bout of buying during the afternoon session with a growing feeling that we may have seen a bottom after the selling of recent weeks. The decline in bond yields puts stocks in a more attractive light, even after Janet Yellen’s comments yesterday regarding possible overvaluations in the market.

Morrisons continues to languish at the bottom of the index, although the ex-dividend element plays a part here. At least the results point to some nascent improvement in the rate of decline, but this will be small comfort to investors that have suffered a near 50% drop from the 2012 highs. The shares may be up more than 20% from the lows of 2014, but there is still a long way to go before Morrisons, or indeed any other listed UK supermarket, can be regarded as promising investments. It will take more than a slowdown in the rate of decline in sales to tempt people back to this part of the market. 

Bullish momentum could be returning to US markets

After a shaky start, US indices appear to have started a slow rally, taking their cue from eurozone markets that look more stable after days of losses.

The headlines were dominated by Alibaba’s impressive quarterly figures, which beat estimates on both revenues and earnings, while the crucial gross merchandise value metric soared by 40%. Initial jobless claims were also better than expected, providing a pleasant change from the unrelenting procession of poor economic data from the world’s largest economy. Two days of firm buying on the dips seems to suggest bullish momentum is returning to US markets.  

Change in OPEC's view on production unlikely

The impressive rally in crude oil has stalled again today, as the effect of recent drops crude inventories wear off. The falls have emboldened oil bulls to keep pushing Brent and WTI to new highs for the year so far, but supplies are abundant, putting the future of the rally in doubt.

OPEC is unlikely to shift from its view that cuts in production are unnecessary, which leaves the longer-term outlook still bearish. 

EUR/USD's run slowing

The euro proved unable to sustain recent highs near $1.14 today thanks to the ongoing absence of any Greek deal. A disappointing read on German factory orders did not help matters, and with investors still pessimistic about the chances of further progress relating to Greece, it looks increasingly like the one of the best runs for EUR/USD in recent months is finally coming to an end. 

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