Normalisation returns to UK markets
A sense of normalisation has returned to the markets now that the possibility of a conflict in eastern Europe has faded; the convoy of Russian trucks heading towards the border with Ukraine has eclipsed the contraction in growth in Germany. Traders in Europe are now adopting the idea that bad news is good news, how can the eurozone do a U-turn when the German engine is sputtering?
The European Central Bank is now under even more pressure to act; the economy is standing still and a region-wide recession is on the cards unless more easing is undertaken.
Carillion has kept Balfour Beatty in the cross hairs, it has now made its third attempt at wooing the construction company. Balfour Beatty is yet to comment but it would be foolish to knock it back again. The Egyptian gold miner has lost over 6%, the company paid it first dividend but that didn’t draw attention away from the drop in profits.
US jobless back above 300K
Across the pond, the Dow Jones is up 27 points at 16,679. The number of people claiming unemployment benefit has increased above the 300,000 level, and this key metric has removed any fear of the Federal Reserve raising rates any time soon.
Cisco is in the red after reporting a drop in net income and a fresh round of redundancies after the closing bell last night.
Copper continues descent
Copper continues its descent as China’s soft industrial production figures still play on traders’ minds. Metal trades are taking their cues from China and there is a realisation that the second largest economy in the world can’t reply on credit booms forever.
Brent oil has lost 1.5% today as the cooling of tensions between Russia and Ukraine has put supply fears on the back burner.
Gold jumped on the news that jobless claims in the US jumped by 21,000 last week. Traders are interpreting this as a sign that Fed is also in no rush to increase the interest rate.
Euro rallies against dollar
Despite Germany, the engine of the eurozone, posting negative growth figures, the euro has rallied versus the US dollar as a Russian convoy that is carrying humanitarian aid is close to the Ukrainian border. The Russian trucks approaching Ukraine could be a sign that the ‘cold war’ between nations is over; an energy crisis is the last thing the eurozne needs, especially as winter is around the corner.
Sterling is starting to turnaround versus the greenback, but it has a long way to go before it claws back the ground it lost on the back of Mark Carney’s comments. GBP/USD remains under the 200-day moving average and it shows no signs of overtaking it.