Market Comments

Heading into the close the FTSE is still in negative territory as mining companies hold the market back.

UK markets

The London market has spent most of the day in the red, and the collapse of the commodity-related companies is behind the move. Mineral extractors are keeping the London market offside and the Chinese meeting tomorrow about growth rates can’t come fast enough. The correlation between mining stocks and Chinese demand is enormous and without dependable demand from the nation the companies will suffer. Eurozone equity markets are getting their wind ahead of the ECB meeting tomorrow which will map out the details of the ECB bond-buying programme.

US markets

Across the pond the Dow Jones is firmly in the red as the ADP employment missed estimates and dropped to its slowest pace since August 2014. The US equity market registered a record closing level this week and traders were looking for an excuse to lock in profits ahead of the non-farm payrolls report on Friday. Shares in Abercrombie & Fitch have tumbled after the company registered a double-digit drop in same-store sales - the drop in revenue was particularly painful. Fellow teen retail American Eagle Outfitters topped analysts by announcing flat like-for-like sales in the final quarter of 2014. The fact that flat sales impressed investors says a lot about the retail industry. Alibaba's shares are off their all-time low after the e-commerce company announced its plans to buy a stake in a Chinese TV producer. The move is part of the company’s plans to expand into the entertainment industry.

Commodities

Gold is clinging onto the $1200 handle but there is no appetite for the precious metal as stability in the equity markets has left it trading sideways. The strength of the US dollar is curtailing any advances for gold, and the non-farm payrolls report on Friday is deterring dealers from taking a firm long position. Copper ran into resistance at 270 cents per pound, and it will prove a difficult metric to break as Chinese lawmakers meet tomorrow to set growth targets for the year. Beijing has recently cut interest rates and that didn’t create much interest in the metal, and the nation will need to launch a large stimulus package in order to drive copper higher.

FX

The euro is edging lower as disappointing services sector reports from the regions piled the pressure on the single currency. Traders are taking their short positions on the euro ahead of tomorrow’s ECB meeting which will give us detail about the QE scheme. In order for the ECB’s bond-buying programme to be successful it must be a broad range of government bonds being purchased as it is the periphery nations that are doing the damage to the currency union, and not the core countries. Although the ADP employment report from the US came in under expectations, the upward revision to the January report propelled the US dollar higher, and has added to the bullish sentiment behind it.