With Europe mostly out of action for May Day, it was a quiet day in London, but at least the traditionally weak period for equities has started off on the right foot. Miners continue to dominate the top end of the FTSE 100 on revived hopes that the Chinese government will be hustled into fresh stimulus measures by the general lack of strength in economic data, with Anglo American andRio Tinto both gaining strongly. Meanwhile Lloyds held on to its gains during the afternoon, as investors applauded the improvement in bad loans and widening margins that puts the bank on course for more good times in the year ahead. The bounce in government bond yields in recent sessions, coming off an admittedly low base, has left a number of dividend payers in a variety of sectors under pressure. This is nothing to be unduly concerned about, since yields are hardly about to enter a long-term bull market, and we will see these names resume their upward progress in due course.
Earnings season continues to see the usual progression of winners and losers. Travel group Expedia was in the first category, thanks to good performance at a number of its brands that allowed revenue to grow more than expected, but struggling social media firm LinkedIn was in full retreat after dire results. A clear divide is emerging between the first and second divisions of internet firms, with Google and Facebook in the former but LinkedIn and Twitter stuck firmly in the latter. These last two have much more limited appeal that should make them bid targets in due course as the giants of this brave new world continue to battle for market share.
Gold has slipped to its lowest level in over a month, breaking key support at $1180, as it looks to break below the range in which it has been stuck for the entirely of April. A continuation of the US dollar strength that appears to be gathering pace spells more gloom and doom ahead, with all eyes now on the March low at $1150.
A dire reading on UK manufacturing has knocked the fight out of sterling, causing cable to fall below its monthly uptrend. With more PMI figures on the way next week the picture for the UK economy looks much less optimistic. As we head into the final days before the election, traders are fast running out of reasons to be long on the pound.