FTSE down 0.25%
Once again the mining sector continues to be a millstone around the neck of the FTSE, as it has done its best to drag the index lower. This has been compounded by the selloff in US equities. GlaxoSmithKline has announced US authorities have given the green light to earlier-than-expected human trials for its Ebola vaccine drug. This is an encouraging occasion where common sense appears to have prevailed, as the World Health Organisation previously warned that the true number of those exposed to Ebola may be in the tens of thousands.
Even though CSR has rejected an initial offer from Microchip Technology, the shares remain up over 34% on the day as both parties asses their positions. Shares in the UK-based CSR has been subdued of late but, being well-placed to take advantage of the shifting trends of connectivity, it will be reluctant to sell itself short.
Aggressive institutional downgrades to Ocado's share price has seen the struggling food retail distributor’s shares drop by over 13% on the day, ironically at the same time as WM Morrisons remains one of the FTSE’s highest climbers.
US traders grasped by 'risk off' mentality
Self confidence in tackling large physiological hurdles has never previously been an issue for US investors but, having popped above 2,000 on the S&P 500, a distinct 'risk off' mentality has grasped traders. Of course with this being a long weekend due to Labor Day on Monday seeing US markets shut, this could be more of a case of good old fashioned profit taking. This afternoon has also seen US preliminary quarterly GDP figures beat expectations with its biggest quarterly rise since the Q1 2010. This should also go some way towards wiping out the memory of last quarter's contraction — an isolated anomaly in an otherwise perfect four-year run.
Ahead of its IPO launch, Alibaba has posted first-quarter profits that have tripled. However, with the acquisition of 26 companies for $16 billion, uncertainty surrounds the company. The question remains, is it buying this profitability or is it from growth in its existing operations? The IG grey market continues to value the Chinese giant at over $200 billion.
Rally in gold price continues
Gold bugs look to be in a pre-emptive mood at the moment as the minor rally in the precious metal's price continues for a third day in a row. History would certainly appear to be on their side as over the last couple of decades September has regularly proven to be gold’s most profitable month of the year. Of course, with the topic of interest rate rises never far from traders’ minds, the lack of any income generated from investing in the precious metal could quickly turn that bullish sentiment.
US dollar strong against euro and pound
The US dollar's comparative strength against both the euro and the pound continues to hog the limelight. Efforts from GBP/USD traders to bounce back above the $1.66 level have so far proven to be fruitless. The absence of encouraging words from the Bank of England is partially to blame for the market's lack of confidence. Things across the channel are even worse as this morning’s inflation figures out of Germany have done nothing to assuage fears that tomorrow's figures from the eurozone will drop to just 0.3%. Should this come to pass, it will bring into sharp focus the very real threat of deflation and pile even more pressure on the European Central Bank to act.