Most markets have started February off in the same red-ink-covered manner in which they finished January, and the FTSE appears to be the only market that might be able to buck this trend. The plethora of European and US manufacturing figures released today has given little reason for short-term optimism that a change is imminent.
Encouraging signs from UK food retailers
Rumours that Ocado is set to embark on construction of its third distribution centre have generated increased speculation that the tie-up with Morrisons is showing signs of success. Randgold Resources might have posted some slightly underwhelming fourth-quarter figures, but its projections for future acquisitions of junior mines, along with its already low production cost-per-ounce, have enabled the shares to spend most of the day up by around 5%. Lloyds has once again found itself the centre of attention after setting aside another £1.8 billion for PPI mis-selling. At the same time as segregating these funds for previous misdemeanours, the bank is asking regulators for permission to restart paying dividends. Chastened by its third-quarter losses, Ryanair and presumably Michael O’Leary have decided to embark on a reinvention campaign to become a considerably more user-friendly airline. How far those who have suffered at the hands of the previously inflexible carrier will be willing to forgive and forget is more debatable.
US reporting season on hold
Today sees a momentary lull in the US corporate reporting season, possibly due to the anticipated nationwide slump in productivity following Super Bowl Sunday. Tuesday will see the reporting season getting back to business, and as the week progresses attention will turn to the February non-farm payroll figures due out on Friday. Equity markets have had the wind taken out their sails with the second round of reductions to the Fed’s debt-purchasing scheme and, as today marks the official start of Janet Yellen’s tenure as Fed chair, it will be interesting to see if this aggressive timetable is maintained.
Gold and oil still sliding
If gold can’t turn around soon, we fear that the momentum will have been lost and the precious metal could once again sink back into its negative trend. Brent crude dropped over $2 in the last couple of trading days, as manufacturing figures have given traders little reason to change their minds. With Chinese sentiment momentarily absent due to the new-year celebrations, copper's month-long slide has, for the time being, come to a halt.
GBP/USD has dropped by over 100 pips, as UK manufacturing has cooled slightly over the last month - a trend that has been in place for the last three months. There has been a similar reaction in GBP/EUR, as EU final manufacturing has strengthened. USD/JPY is struggling to hold onto the ¥102 level, having flirted with the 100-day moving average on intraday weakness.