Last night’s price action in the US looked very much like a relief rally rather than a shift in trader sentiment. Initial reactions to rumours the US was making progress towards avoiding its debt ceiling, and therefore a default, enabled the Dow to rise by 2%. Unfortunately, closer inspection of rumours shows that, rather than tackling the issue head on, the Republicans and Democrats have merely agreed to postpone the decision until six weeks down the road. Why do something today when you can put it off until tomorrow looks to be an ethos that Washington is currently happy to live by. Consequentially, the Dow has flattened out today, rather than continued to rise.
Back here, what could have been a rather gloomy end to the week looks to have been avoided, as the FTSE has managed to claw back all of the week’s losses and bounce 180 points from the week’s lows.
JP Morgan has made a loss of $380 million in its third quarter, after having to absorb a $7.2 billion cost for charges and legal fees. However, these figures still saw the company’s earnings-per-share come in better than expected.