Another day of directionless trading highlights just how difficult it is to work out market sentiment during the dog days of August. Eurozone economic figures and UK unemployment data seemed to be injecting a shot of optimism into proceedings but the positive atmosphere waned in the afternoon as US equities once again failed to begin the session in any strong fashion.
Yet again the 6600 level has proved to be too much for London’s leading index, even with news that UK unemployment fell in July. Instead, traders focused on minutes from the Bank of England that showed the universal dovish sentiment on the MPC had not lasted beyond the first meeting chaired by Mark Carney, raising fears that others may be tempted into a more hawkish frame of mind and oppose the extension of ultra-low interest rates into the dim and distant future.
In company news Eurasian Natural Resources issued its potentially valedictory set of half-year results, showing that profit is down. ENRC has abandoned the dividend, but the news is small fry when compared with reports that the fraud investigation into the firm has intensified. Most ENRC investors will be hoping they can get out without a new and lower offer being made by Kazakhmys, which is still looking to acquire its Kazakh peer.
Wall Street continues to flail around for a reason to push higher, but none is yet forthcoming. Low volumes are the curse of the summer market, combining with a lack of news to mean that investors prefer to sit on the sidelines and await developments rather than submit themselves to the ‘death by a thousand cuts’ of choppy trading. If only we could have more billionaire investors enlivening proceedings with twitter updates of their investment decision.
Oil - US Crude is heading back to yesterday’s lows in the wake of inventory data, after figures showed that stockpiles remained near the top of their five-year range for the time of year. Even after seven consecutive weeks of declines crude remains plentiful, meaning that any extension of the push higher seen since the beginning of July is still some way off.
It may have done little for equities but the Bank of England has propelled sterling higher today, with GBP/USD looking to push past the highs of last week just above $1.55. If the unemployment rate moves faster than expected then the bank could be caught on the hop, having to increase rates sooner than had been planned. Mark Carney is learning that no plan ever survives first contact with the enemy.