UK Market Comments

UK markets are languishing as the quarter draws to an end, but US indices have started the final day of trading for September in a more positive mood.

UK markets

The FTSE 100 remains firmly in the red, testing the 6600 zone once again. Again a few buyers have been found, but the index’s poor performance versus its global peers is still plain to see. Profit warnings in the clothing retailers will have damaged a few long-term bulls, especially where Next is concerned, but the firm has a history of storming back after a bad performance and it would be unwise to write off Lord Wolfson just yet. Sainsbury has enjoyed a small bounce ahead of tomorrow’s statement, and any sign that the firm is weathering the storm better than its peers will likely see a decent reaction to the upside.

US markets

Bargain hunters are active on Wall Street again, but their attempts to pick up some cheap shares are being dampened by the knowledge that the ECB meeting and non-farm payrolls are yet to come. Old industry and new tech are both big movers in US markets this afternoon. Ford has fallen by nearly 3%, adding to yesterday’s dive, as the impact of its profit warning continues to be felt. Meanwhile eBay has finally come round to Carl Icahn’s view that PayPal will prosper more as a standalone business. eBay’s decision will see the board focus on the online marketplace while leaving the payments firm to fend for itself, but it certainly makes Alibaba’s one size fits all approach look odd. The insurgent Chinese firm might find itself coming under equal pressure in due course to slim down its business model to avoid a dispersion of effort.

Commodities

A choppy day in commodities saw oil rally in the morning while precious metals fell once again, and then the situation reversed during the afternoon session. For the time being $1215 appears to be the floor in gold prices, but any advance to $1222 sees the sellers come back into the frame. Gold miners have fought valiantly to keep mines open but a crunch point is rapidly being reached where producers will have to shut mines. So long as income-yielding products remain in vogue the expectation is that we will see another attempt to push the price back to $1200.

FX

An unchanged reading in eurozone unemployment saw the euro drop to fresh two-year lows against the US dollar. The endless ping-pong between the ECB and national governments continues, to the detriment of the eurozone economy. At some point it would be nice to see a real crisis management strategy developed. The eurozone escaped sudden death by the skin of its teeth, but this long painful decline is far worse, sapping confidence across the global economy. The ECB can lead the way, but its options are limited.