UK Market Comments

The FTSE has lost ground throughout the day and US markets have done little to change this momentum.

UK markets

Energy stocks have dominated the FTSE movers list throughout the day as both Shell and BG Group posted pleasing second-quarter figures. Heartened by its peers performance while being marginally oversold, BP has seen its shares bounce although only making up a fraction of the ground lost over the last couple of days. Centrica on the other hand has seen its first-half figures collapse, down 35% from last year, as a mild winter in the UK cut demand while extreme weather conditions in North America saw costs rise. Over in Europe a market update from Adidas has seen its share price hammered, as high marketing spend at the World Cup, disappointing revenues from its golf arm and worries over Russian exposure, have necessitated a profits warning. Following the considerably better-than-expected figures from Ryanair on Monday, shares in International Consolidated Group, the parent company of British Airways, have sold off ahead of tomorrow mornings first-half figures.

US markets

Ahead of the US open the markets were informed that US unemployment claims had come in as expected, possibly tapering any over-optimism ahead of tomorrows all important non-farm unemployment figures. The Chicago PMI figures came in well below expectations at levels last seen over 12 months ago. Exxon Mobile also released its second-quarter figures before trading started, with expectation-beating earnings, but a drop in production figures triggered a selloff in pre-market trading. The second-quarter figures continue to come thick and fast with the likes of Kelloggs, Mastercard, Time Warner and Invesco reporting throughout the day.

Commodities

Natural Gas continues to stabilise after dropping by more than 20% in a month’s worth of a selling, but with global issues continuing to cap optimism there is limited sign of any recovery. Once again the support for gold appears to have disappeared, with the precious metal breaking through the 50-day moving average and is setting fresh lows for the month. The continuingly bleak outlook for the current Brazilian coffee harvest has seen the commodity jump 4.4% in the first half of the day’s trading, setting fresh two-month highs. With more disappointing weather expected in the coming weeks this run could carry on for some time.

FX

This morning’s eurozone data sent out mixed messages with the overall unemployment rate continuing to drop, while at the same time inflation continued to fall. The weakness in EUR/USD continues to persist as it adds to the 300 pip loss for the month of July. The flow of economic data coming out of the eurozone has not encouraged a change to its direction. After it started the month looking likely to continue setting higher highs GBP/USD has hit a brick wall, and in the last trading day of the month looks set to drop almost 300 pips. The intraday action breaking through the support of the 100-day moving average indicates that there could still be further falls ahead, especially as the market perception that the UK would start raising interest rates ahead of the US is continuing to be questioned.