It’s a mixed end to the week, with UK and European indices down and US stocks broadly higher. The FTSE 100 is currently down half a percent, in line with losses in Europe.
UK markets
Jilted pharmaceutical firm Shire came out with all guns blazing this morning to prove that it is perfectly capable of carrying on life as an independent firm without AbbVie. This morning the market thought that the lady doth protest too much but the afternoon has seen a turnaround with the share price moving back above £40 to stand around almost 4% higher on the day. Miners are under pressure thanks to the weak Chinese property news and the diminished outlook for raw materials demand that this suggests, while other names such as BP and Next are merely seeing a booking of gains after bouncing along with the rest of the market this week. The weekend should see the publication of the ECB’s.
US markets
News of a fresh Ebola case in the US and rumours of another made for a choppy opening on Wall Street but for the moment indices are holding their ground, with the Dow still above 16,700. UPS and Procter & Gamble earnings provided reason for optimism, while new home sales were a mixed bag, rising in September to a six-year high but heavy revisions meant that the positive impact was limited. Optimists can still be pleased with their work in carrying on the equity rally that began in the preceding week, although nerves will build ahead of the Fed meeting next Wednesday. A fairly dovish outlook that concedes the risks of a premature rate increase and extols the virtue of looser policy should be well received by investors.
Commodities
Oil prices have been knocked sharply lower again this afternoon, giving back around half of yesterday’s gains. So far most OPEC participants are keeping quiet on their negotiating positions, so while today’s down day reverses some of yesterday’s positive momentum the overall trend is likely to see Brent retesting the $87 level in short order. Gold meanwhile is holding above $1230, with buyers stepping in to end the week on a better note. However, the retreat from $1250 will probably be an extended one, with a preliminary target around $1222.
FX
UK GDP came in line with expectations this morning, giving the pound a lift, but the UK economy is going to have to do a lot more than just meet expectations if it is to change the perception that the Bank of England has put its plans for a rate hike back in the safe. Rallies in GBP/USD have been an excuse for selling, so any move back towards $1.62 next week is going to produce the same effect. German IFO data and the bank stress tests next week will mean that euro watchers will have a busy start on Monday, and while the $1.26 level is holding for now the pull of economic gravity is going to take us back to the October lows as more bad news emerges.
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