Mining sector weighs on FTSE
The UK mining sector has been a thorn in the FTSE 100's side all year, but lack of interest in the sector more recently has seen the indices decline for three consecutive weeks. This is in stark contrast to the DAX which has seen gains for the past seven, as well as establishing new all-time highs.
German IFO business climate data overshot market expectations today, coming in at 109.3 versus the expected 107.9. However, once again, the divergence between the eurozone's core and peripheral economies was illustrated by lower-than-expected retail sales number for Italy; they dropped by 0.3% month-on-month after an increase of 0.1% was expected.
Hospitality company Whitbread has taken the FTSE top spot today, adding 2.88% on the back of an upgrade from JP Morgan. This comes hot on the heels of an increased price target from Morgan Stanley recently, and has seen the share price push to new highs.
Dow in 70-point range
For the last week the Dow Jones has been caught in a fairly tight 70-point range, with little appetite to make a decent break through 16,030. Closing the week above this level would certainly give a little more credence to the bull camp, and, despite some softness in the tech sector today, the Dow may be coiled for a strike higher.
Comments from Federal Open Market Committee member Dennis Lockhart were of interest, particularly since much of the ‘guidance’ from various Fed members has been contradictory at best. The anticipated faster US economic growth in the latter-half of the year has not come to fruition despite some progress on the employment front. While this may tend to conflate with any views that December will bring a small scaling-back of asset purchases, one could still expect that any strength in the next payrolls number will inject caution into the market.
The Dow is currently trading at 16,021.
The commodity currencies are seeing a little more pressure to the downside, with the Australian dollar the worst performer on the day on the back of the prolonged softness in the precious metal sector.
The Swedish krona is the top G10 currency today, due to heightened consumer and manufacturing confidence in the Scandinavian country.
The euro has pared back some of its recent losses against the US dollar, emboldened by the strong German IFO number. European Central Bank president Mario Draghi spoke at the European Banking Congress; plans to instigate European backstops in addition to national backstops with respect to the planned banking stress tests have given the single currency a lift.
Bears circle gold
Gold has consolidated, finding a base around the $1240/oz mark. The sentiment surrounding the metal at the moment is profoundly bearish – not unusual given that the price has fallen over $100 since the beginning of November.
Silver has dropped below the $20 mark and looks exceptionally oversold. We may well see a bounce in the two metals in the coming days as traders take profits and bargain-hunters step in.