As global leaders start to arrive in the UK, London winds up for this week’s G20 meetings. Yesterday’s profit taking eventually came to an end in US trade last night and although the market suffered quite a sell off yesterday with automakers and banks taking the brunt of the selling, this morning markets are holding up well in the face of Obama’s tough stance on the US car industry. The US government seems to be finally coming to terms with the fact that they simply can’t bail out every loss making industry and the recession has to take some casualties. Unfortunately, it will mean more business failures and huge job losses across the globe, but this is a fact of the recession and there comes a point when the tax payer has to say enough is enough.
The FTSE is expected to be a little perkier this morning as we’re calling the index to open some 25 points higher at 3788. A spark of good news also came from Gfk Consumer Confidence earlier this morning as it jumped to a figure not seen since May last year showing a better than expected figure and so far this week we’ve seen a few glimmers of hope for the UK consumer and home owner. With mortgage repayments having come down, yesterday saw a saw rise in the number of mortgage approvals to 38k, when only 34k were expected. Tomorrow will see more UK housing data in the form of Halifax prices.
Barclays will also be in the spotlight again this morning as the once again reiterate that they are under no circumstances going to join the Asset Protection Scheme and concerns are also creeping in that they may not get as much as they expect for their iShares unit. In hindsight, looking at where they closed last Friday night it’s no wonder the share price suffered a bout of serious profit taking yesterday dropping 14%.
M&S has surprised slightly this morning by announcing a decline in sales that wasn’t as bad as many had expected. Of course they remain uncertain about the future, but this is yet another small indication that things on the high street may be at the beginning of the end.
The dollar has reversed some of yesterday’s gains in Asian trade but most eyes remained on sterling yesterday and will probably continue to focus on the currency as G20 gets underway. It seems at the moment that any bad news about the prospect of the global economic outlook hits sterling more than any other currency. It certainly didn’t help when the CBI said that it expected a further 15k jobs to go in financial services over the next three months alone as our unemployment tally hurtles towards the three million mark. But overnight has led to a move back to the 1.4300 level having breached the near term resistance seen around 1.4275 and support is seen at 1.4075. Cable has been coming up against serious headwind every time it has a go at 1.5000.
The euro dollar is also better this morning having suffered yesterday for a third day as expectations of another cut to 1.00% mounted. The moves of the last couple of days have shifted sentiment back in favour of the dollar and we currently sit right on resistance at 1.3250. Support is seen around 1.3065 and then 1.2970. However, the long term technicals indicate that if 1.3000 holds up then the recent trend from the lows at the beginning of March should continue and some touting targets such as 1.4130 if we move higher.
Gold has been holding up rather well considering the move higher by the dollar and also when the trend line low seems to have been breached opening the way for a test of support at $900 again. But for now the bulls are propping the precious metal up and this morning we’re at $919.
Brent crude dipped below $50 a barrel for the first time in over a week as the general mood swung in the favour of bears following comments from the Qatari oil minister who said that oil was unlikely to hit $60 a barrel in 2009, due to the state of the global economy. It is still strange to see how closely correlated to equity movements the price of oil is right now when eighteen months ago an drop in oil would have sent equities higher and vice versa.
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