This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
FTSE gives back gains
The FTSE 100 just couldn’t hold on to the early gains as the losses from the mining sector became too much to bear. Natural resource stocks initially jumped on the back of the Chinese rate cut announcement, but anxiety set in as to why Beijing needs to loosen rates in the first place.
Barclays is set to finish the day on a positive note ahead of the full-year figures tomorrow, and the bank is expected to continue cutting costs. The bank’s investment arm is anticipated to be the worst performing unit, as deleveraging and low market volatility will see profits at the division dive.
Tullett Prebon is on the rise as the inter-dealer broker will reveal its annual figures tomorrow. Trading conditions have been tough as tighter regulation and a risk-off attitude at banks have seen revenues drop in recent years.
Dow surges higher
The Dow Jones has rocketed higher in early trading as US equity traders fall back into the old habit of taking bad news as good news, and the disappointing economic announcements have just nudged back the possibility of any interest rate hikes.
The Federal Reserve’s mantra is that rates will remain unchanged for at least ‘two meetings’, and now that the cracks are beginning to show in the US recovery Janet Yellen will be wheeling out that phrase for some time to come.
The jobs report at the end of the week will be the highlight for Wall Street and dealers will be going over all the details of the announcement, in particular the participation rate.
Gold drifts lower
China’s interest rate cut couldn’t convince traders to purchase copper futures, and the metal has been trading aimlessly throughout the session. The official manufacturing figures from Beijing showed the sector is still in contraction territory, and the loosening of monetary policy just proves how worried the Chinese authorities are about the economy. Traders won’t be dashing to buy copper in the near future for fear the slowdown in China has yet to bottom out.
Gold is drifting lower as the $1220 mark has proved yet again to be a difficult barrier to break though, and the precious metal is losing demand as the fear factor, fuelled by Greece and Ukraine, has departed for now.
GBP/USD below $1.54
The euro has edged higher after the CPI figures for the region came in better than expected, and even though the eurozone is still suffering from deflation the situation is on the mend.
March will prove to be a difficult month for the single currency as the European Central Bank embarks on its quantitative easing scheme. With opinion divided over the Fed’s language, the greenback will continue its surge higher.
The pound has slipped below the $1.54 mark as solid manufacturing figures from the UK in February couldn’t hold back the downward trend that the sterling has been stuck in since last week.