There’s been something of a buying frenzy in recent days and it hasn’t only been because of optimism in the run up to the EU summit and the continuation of that following Wednesday’s negotiations, but corporate earnings have been on the whole relatively strong. 

Throughout the crisis and the market selloff in August, bigger blue chip companies have remained in decent shape with lots of cash and waiting to pounce when the situation looked to be improving.  Even though many economic indicators have been turning sour during the same time the bigger companies have been able to weather the storm and this earnings season have come out smelling rosy.  So now the elephant in the room has been dealt with, even if it is seen by many as a temporary fix that’ll have to be readdressed in a year or two year’s time, the focus is back on corporate earnings and economic data.

On top of the decent round of earnings yesterday, we saw some good news from the US on the growth front.  Despite poor consumer confidence data earlier in the week yesterday’s GDP data was a welcome number and showed that the US economy had finally exceeded its pre recession level of growth.  The fact that the recovery has taken longer to achieve than any other since the Second World War shows just how deep the 2008 recession has been.  There’s still a long way to go though and it certainly doesn’t guarantee that better times are ahead.  Unemployment still remains incredibly high in the world’s biggest economy as the slow recovery has not been enough to create a significant amount of jobs.  In contrast to the UK and much of Europe where people are deleveraging, spending less and building up their savings, in the US they are dipping into those savings to fuel their tireless appetite to consume.  At some point those savings will run out.  Next Wednesday when the Federal Reserve announces its latest interest rate decision, investors will be listening keenly to see what their take is on the jobs situation and whether they’ll announce further stimulus.

The FTSE this morning is adding to the gains of recent days and is well on track to record its second best ever monthly gain.  A remarkable feat when you consider that at the beginning of October there was a feeling that we might see yet another typical mass selloff as we have so often in the past.  The first few days started very nervously as the FTSE fell 3.5%, so if we hadn’t seen that then we’d probably be saying we’re on the verge of recoding the best monthly gain in the index’s history!  This morning the index is happily drifting higher trading at 5744 as the appetite for risk remains insatiable.

The appetite for risk boosted the single currency way beyond the expectations of many as EUR/USD went from strength to strength, smashing through 1.4000 to get to the dizzy heights of 1.4200.  This morning a little bit of profit taking is the order of the day with EUR/USD trading at just a tad below its highs around 1.4195.

The slide in the greenback against the single currency helped accentuate the price of gold, which drew in bargain hunters as they transferred their cash in to high yielding assets.  One thing that could have been playing on trader’s minds was the fact that this bout of extra funds could actually be seen as disguised monetary easing, meaning future inflation and we all know what investors believe is the best hedge against inflation when interest rates are low.  All in all, the yellow brick added 19 dollars to its price, closing at 1744.7 and at time of writing, investors seem to be taking a breather, with the commodity down a tad at 1739.3.

As with gold, the energy sector had its fair share of overexcited buyers yesterday, as traders revelled in the news received from the EU leaders meeting.  The fact that equity markets were flying and the greenback was slumping helped crude’s price rally and to add to the good vibe, the decent US GDP figure punctuated the rise in crude given the bigger oil consumption.  As the trading day came to a close, Brent was trading at 112.19, which at time of writing has received a small chip off the top, as it trades at 111.71.