The public’s faith in our politicians is at an all time low and it’s hardly surprising as at the moment there doesn’t seem to be anything that they can do right.
The rules seem to be very inconsistent with anyone who claims expenses in the private sector and on top of this they are easily open to abuse. After a year of anger being vented on the City it seems only fair that the attention is turned onto government for their hap hazard expense claims and whilst pretty much every single one of them is guilty, it’s our Gordon’s party who are taking the brunt of the criticism and one can’t help think that it’s justly deserved. The trust that’s been lost will be near on impossible to replace and worst of all it’ll be up to the politicians to over haul the rules! Such a mess surely calls for a simple answer along the lines of reducing the ways and amounts MPs can claim on expenses and increasing their basic salaries. It would almost be worth considering a salary scheme based on where their constituency is and paying slightly more to those MPs who live further away from London.
Onto the markets and this morning is suffering from some profit taking. We were actually expecting a small rise for the FTSE on the open after a half decent performance from Asian markets, but at 8am our price looked far too optimistic and when the cash markets opened the sellers arrived in force. At the time of writing the FTSE is 35 points in the red at 4427. The market has paused for breath again and rejected the 4500 level twice in as many days showing a little “double top” to have formed in the hourly chart. This is also the case for other indices too, with the Dax showing a similar pattern just below the 5000 level. In was inevitable that the market was going to eventually run into some headwind and this seems like the week that the conditions have turned less favourable. It is true to say that valuations at the beginning of March were extraordinarily low, but at these levels I am hearing noises that we might have seen the best of the run higher for now and on top of this over a third of share price targets set by analysts have been reached. We bounced of the 4400 level on Thursday and in this recent uptrend pull backs have been gratefully received by the bulls who’ve pounced on them as a buying opportunity, so clients will be watching closely to see if support will be offered here again.
Whilst HSBC rose in Asian trade after Goldman Sachs increased their recommendation on the stock from neutral to buy, but in London they are down and dragging other banks with them, ahead of their trading update.
The dollar is a little better against the euro and sterling this morning after cable made a late night push to new highs on Friday night to trade above 1.5200. We’re just below there at the moment at 1.5185 after Friday’s late move was on relatively low volumes, but the trend is upwards and we’re not far off the 2009 highs set in early January. Near term resistance is seen at 1.5220, 1.5270 and then around the year’s high of 1.5365.
The euro also had a big move just as last week was drawing to a close, but the losses in equities this morning is just keeping the dollar’s losses against European currencies in check.
Foe sterling/euro we gave up the gains on Thursday following the BOE decision and not made anything back as we sit on the 1.1150 level, which is expected to offer some support.
Gold is still sitting around the $915 level and for the last few days has been sitting ominously below the 920 mark where resistance is seen. Further dollar weakness could lead to a test of resistance but one gets the feeling that this may need to be supported by a rally in the equity market too as investors continue to take on more risk. The bid question is though, are they happy to take on more risk driving the equity market any higher following the stellar performance we’ve just had.
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