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FTSE loses gains
What little positive news there was this morning has failed to provide the needed support for the FTSE 100 to rise back above 6700 today. We are now at the stage where good US data advances the cause of an earlier-than-expected rate hike. Stock indices have not been keen on a UK rate increase, but the thought of a US rise leaves them almost quivering in fear.
Meggitt continues to lead the fallers in London, as most investors choose to take their money and run. The rally of 2013 is now a distant memory, and Meggitt joins the list of those rallies that have faded. 2014 was supposed to be a stockpicker’s year, but most of the skill so far seems to lie in staying out of previous strong performers rather than backing up recent winners.
Aggreko still thinks it will have a good second half, a viewed underlined by an increase in UK contracts that will offset the strong pound.
US markets fall back
US earnings season rumbles along, but the big names have had their day and have left the field to the smaller firms – still important to fund managers, but their figures have little ability to move the broader market.
US indices have fallen back, but there still seems a desire to lift this market off the lows of last week, even if this will only end with another lurch lower.
This week is light on weighty US data, which leaves the market with little chance to reassess the growing view that a Federal Reserve rate hike has been brought forward. In this respect, the in-line services PMI reading was not going to shift views in either camp.
Silver at mid-June lows
With the US dollar in fine form commodities have taken a hit across the board. The effects are most noticeable in gold and silver, with the latter at its lowest level since mid-June. Safe havens no longer, we can expect to see more downside in these metals as long trades from earlier in the summer are unwound.
Plentiful supply continues to be the curse of the oil market, which has seen prices little changed from yesterday, but the bearish scenario remains in place.
EUR/USD could test November lows
Traders have taken the negative view of the European situation painted by this morning’s PMI figures and have sold the euro once again. EUR/USD seems on course for a test of the November lows around $1.33, as the market does Mario Draghi’s job for him. At this rate there is little he will need to do at the Thursday meeting but sit back and point to a EUR/USD chart. The European Central Bank’s policy of saying much but doing little continues to work, even if politicians like Francois Hollande would prefer it the other way around.