UK Market Comments

Heading into the close the FTSE 100 is struggling to stay above 6500 and looks set to close down by over 50 points.

UK markets

The aftermath of yesterday’s assassination of UK-based food retailers saw a mild bounce in the morning session. The strength of this bounce might be diminished following Warren Buffet's reticence from his acquisition of Tesco shares yesterday, with his statement that it was a 'huge mistake'. Commodity stocks dependent on Asian demand have suffered as traders continue to view images of unrest on the streets of Hong Kong. Fears that this could escalate have instigated a selloff, with investors looking to reduce their risk exposure. Following the latest ECB press conference and Mario Draghi’s Q&A session European equity markets have shown how uninspired they are, falling across the board. It is hard to believe the news that both Greek and Cypriot junk-rated debt would not be ruled out of consideration as part of the ECB's Asset Backed Securities purchases.

US markets

It is now less than a week before Alcoa once again kick off the latest US reporting season, and in the absence of US corporate data the Dow looks to have taken its lead from Europe. Unfortunately confidence is in short supply on this side of the Atlantic, and monthly US factory orders dropping by over 10% have compounded the negativity. This has subsequently seen the Dow start the trading day 24 points lower at 16,780.

Commodities

Brent crude's demise continues to dominate the commodity trader’s landscape, flirting with its longer-term support from 2012 around the $91.20 level. Considering it has made a fairly direct move from above $114 to these subdued levels, it will be interesting to see if this support can finally kick start the interests of the value investors.

FX

The last 24 hours have seen the USD/RUB stall as it battles to hurdle above the $40 level. The pre-emptive Russian government talk of restrictions to capital control could help force this through the psychological barrier. GBP/USD once again is moving into oversold territory, dropping below the $1.62 level as a fresh 70 pips have been given up. There looks to be an inevitability in it retesting the lows from early September. Today’s ECB statements instigated a short-lived rally in EUR/USD, but less than an hour later almost all of those gains were given back. In the race to see who can lose the most ground against the US dollar the euro and sterling are running a close race.