Market Comments

Heading into the close the FTSE is 40 points lower, but still finds itself over 3% higher for the year so far.

UK markets

The FTSE 100 ends the month noticeably higher, making it a good start to the year for this index. This has been done despite a continuation of the slump in oil company share prices, as well as more losses for the beleaguered mining sector. The road however looks grim – Greece is increasingly behaving in a manner that seems calculated to infuriate its eurozone partners, while US growth, as underlined by today’s figures, is entering a softer patch. January may have seen the high-water mark for the index for the time being, especially since it finds itself yet again unable to break through 6900. BT’s decision to put its pension fund in order before embarking on more adventures wasn’t quite the outcome investors had been hoping for, and as a result the shares languish at the bottom of the index. Over in Europe markets are ending the month on a downbeat note, although the ECB’s magic meant that major indices like the DAX and CAC have done even better than the FTSE 100 so far this year. With Greek worries only set to increase as February begins however, there will be many looking to cash in their gains until the situation becomes clearer.

US markets

Markets on Wall Street shed ground rapidly at the open, as the whipsaw action continues. GDP figures from across the North American continent were below expectations, lending further weight to the idea that the previously high-achieving US economy is running into tougher going. However consumer spending was robust, giving hope that coming revisions will see the number pushed higher. MasterCard and Chevron both did better than expected in their earnings, helping to offset a number of weak reports this week, but the limelight was stolen by Shake Shack, which opened up over 100% higher on its debut today. Although on a pricey multiple, investors are prepared to give the benefit of the doubt to the new firm, with many no doubt remembering the stellar performance of another highly-priced fast food IPO, namely that of Chipotle.

Commodities

Gold bounced yet again this afternoon, but it remains a ‘sell on strength’ commodity for the time being, even as central banks continue their interest-rate cutting ways. We could see a revival of appetite for the metal if Greece really does stage a fall-out with its creditors, but for now the lack of QE excitement relating to the ECB means that the downside in gold has opened up once again.

FX

The drop in US GDP numbers meant that investors took the chance to buy the dollar and shed some risk assets like the euro and sterling. Dollar buying might seem an odd thing to do at the moment if US data is set to worsen, but even now the world’s biggest economy is still streets ahead of many others. Unlike the euro, the dollar doesn’t have the threat of losing members hanging over it, as German resolve towards the Greeks hardens into something approaching the strength of Parthenon marble.