Miners still driving FTSE
Yet again miners are driving the FTSE 100, after weaker manufacturing PMI figures from China dispelled the cautiously optimistic atmosphere that prevailed yesterday. Construction data showed that the previously radiant assessment of the UK economy was not entirely accurate, adding to the more negative tone to the session, and home builders came under pressure as a result.
Supermarkets moved in lockstep after data showed that the major supermarkets continue to suffer from the presence of budget rivals, with Tesco’s situation becoming even bleaker as its market share fell by 1.5%. This is hardly auspicious news ahead of figures tomorrow morning, and puts Tesco on a course to revisit the 2014 lows around 280p.
Tech stocks prop up NASDAQ
Tech stocks did their bit to keep the NASDAQ from slipping into the red, with Apple in favour a day after its major conference. Even Twitter has found the strength to rally, with comments about it becoming a potential target for Apple no doubt helping.
However the overall tone in markets remained negative, which a bounce in US Treasury yields keeping equity indices in the red after yet another record high for the S&P 500 last night. The move into bonds is perfectly understandable when the ECB meeting is taken into account, and it is likely investors will continue to favour this haven ahead of Mario Draghi’s monthly step into the spotlight.
Brent continues heading lower
There are still plenty of people queuing up to sell gold and silver, but in both cases a floor seems to be developing after the slump. Hopes of an easing ECB reignite the old ‘dovish central bank, buy gold’ trade, but Mr Draghi will need to be cooing furiously if we are to see gold register an up day. The $1238 level appears to be holding for now, but no positive momentum has yet appeared.
Brent crude is now breaking lower for a third day, as the physical underpinnings of the market slip away. It appears Libyan supplies might be turned back on, signalling further downward pressure on prices.
Euro holds near recent lows
The euro continues to hold near recent lows, holding its breath ahead of Thursday’s ECB meeting. In such circumstances, ‘wait and see’ is perhaps the only course of action open to most, with the ECB likely to be either the curse or salvation of the year-long up move in EUR/USD. The CPI weakened yet again, tilting more traders into the ‘ECB action’ camp, but unemployment data shows that whatever the ECB does, the eurozone’s problems run far deeper than just low inflation.