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UK markets see heavy selling
It has been a day for scary headlines, which always proves to be a dangerous time for financial markets. This morning the Finns were reported to be engaging in a spot of sub hunting off Helsinki, while during the afternoon we saw fresh falls as reports hit (and were later denied) of Iranian forces taking control of a US vessel. Details are sketchy, but combined with still unsettled sentiment over the Greek situation and a general malaise of disappointment regarding Apple earnings, it set the stage for triple-digit losses on many indices.
Unsurprisingly the only real gainers in London during the afternoon were gold miners, as geopolitical jitters gave traders their chance to jump back into these unloved shares, while the usual crop of high-growth names like ARM came in for some hefty selling.
Whitbread shares were not immune, despite another strong set of figures, perhaps due to continuing disappointment that the firm refuses to let go of Costa Coffee and removing the chance of a special dividend that any such sale might bring.
Apple figures unable to lift US markets
It seems that not even another stellar quarter from Apple can restore the bullish sentiment that markets have lacked for the past few weeks. To add to the catalogue of woes, US consumer confidence, hitherto one of the star performers of American economic data, fell victim to the general malaise, coming in well below expectations.
The problem for investors in all markets is that while they haven’t found reasons to sell stocks, they haven’t got firm arguments for buying them either, condemning us all to more of this whipsaw action.
As has been the case for the past two weeks, dips below 18,000 in the Dow Jones continue to find buyers, and just to be contrarian the small-cap Russell 2000 is moving higher, having led the way down yesterday.
Gold and silver find buyers
The Iran news gave gold and silver buyers the cue they needed to follow up on yesterday’s bounce with yet more buying, but even after the reports were said to be false the rationale remained. US dollar weakness on those consumer confidence numbers is playing its part, as the market looks towards the Federal Open Market Committee meeting tomorrow.
Oil prices moved higher thanks to the Iran news, but were unable to hold their gains once the initial excitement was proved to be false.
Cable makes gains
Cable opted to look beyond the negatives from this morning’s UK GDP report, with the currency pair moving yet higher. With only around 40% of data available for this first growth reading, there is plenty of potential for the original 0.3% number to be revised up, and anyone cynical enough to point out that a downward revision was also perfectly possible clearly received short shrift.
The euro also held its gains, lifted by ongoing optimism that Greece might be in with a greater chance of reaching an agreement thanks to a more conciliatory tone from Prime Minister Tsipras.