Markets have done their best to reclaim yesterday's lost ground, but have come woefully short of convincing the pessimists. Following confirmation from the Bank of England that interest rates are unlikely to rise anytime soon, it is hard to believe that it will be too long before some of the more attractively-yielding equities will entice the buyers back again. Until then, however, the market seems content to drift higher.
A number of equities have released corporate news today, giving investors plenty to mull over. Cynics might question the validity of Ladbrokes' claims that the good weather is the primary cause for the 20% drop in first-half figures, while Rio Tinto have continued the trend of disappointing miners' figures as they have all been badly hampered by the soft commodity markets.
Insurers Aviva and Standard Life both saw solid growth in operating profit and increases in funds under management. In the background stories are once again emanating from the US about BP; this time US Federal courts are requiring a further $130 million to be allocated in order to cover thousands of claimants. In the end, however, broadly speaking the balance of good and bad news has balanced itself out, doing little to guide the market either higher or lower.
As US unemployment claims came in as expected, US markets opened unhindered by economic data. Having used up most of the corporate newsflow firepower in previous weeks, there has appeared to be a shortage of enthusiasm to drive markets higher. It appears that fears over an earlier-than-hoped for end to the quantitative easing process are keeping a lid on the excitement. Mortgage issues in the US are beginning to ease and both Fannie and Freddie May have returned to profit. This could still pave the way for higher highs in equity markets.
Following on from the overnight improvement in both import and export data coming out of China, the copper price has been given a boost; a potential return of driving demand to both the US and Asian markets in the construction metal looks set to break it out of its recent price range. Gold is once again trying to break the negative drive lower but today's bounce looks no more than a respite in an otherwise relentless decent.
After the dramatic moves in GBP/USD yesterday on the back of Mark Carney's comments, the currency pair is today in a considerably more lackadaisical mood and by mid-afternoon the trading range had only been 35 pips in comparison to yesterday’s 330 pips. Regardless of the comments coming from Japanese prime minister Shinzō Abe over the last couple of days, USD/JPY has shown no sign of mounting a serious charge higher. It appears that more than wishful thinking is required to weaken the yen.