The German ZEW survey for March trumped expectations and US retail sales delivered a robust showing in February (rising at its fastest level in five months), which both contributed to major spread trading indices markets building on the positive bias of the past few days.
Markets will be looking to today’s Fed meeting with no expectation that policymakers will hint at any easing back on current loose monetary policy.
The Fed is likely to continue to keep up its current stance of scepticism with respect to the recent improvement in economic data, and thus keep the door ajar to the possibility of further easing.
Financials have led the way in today’s move higher with insurers pushing up after results from Prudential and Standard Life beat expectations.
Banks aren’t too far behind either with Lloyds pushing up on a broker reiteration at the same time as announcing job losses, along with Royal Bank of Scotland of 1,700 jobs.
On the downside, Chilean copper miner Antofagasta is the worst performer in stark contrast to the rest of a buoyant mining sector despite announcing record revenues and profits, such is the fickle nature of markets these days.
G4S has also had a disappointing day after announcing a £55m hit to profits after its failed bid for Denmark’s ISS.
US markets opened higher today on the back of a more buoyant Europe and a big improvement in US retail sales with both the S&P 500 and Nasdaq hitting multi year highs.
Apple shares continue to hit record highs as investors continue to look past the problems in Europe. They have been focusing on the positives in the US economy and the likelihood that even if economic data were to deteriorate the Fed would step in to hold up the markets.
In forex spread trading, the so called risk currencies have jumped higher today with the New Zealand dollar and Australian dollar pushing higher on the back of firmer metals prices.
The pound has also had a particularly good day after the weakness of recent days, after UK trade data for January came in ahead of expectations at -£7.5bn, managing to bounce strongly from the 1.5610 level.
The Japanese yen has continued on its bout of recent weakness hitting its lowest levels against the US dollar for 10 months.
The single currency has had a much weaker bias today as concerns about growth potential in the smaller European nations weigh on the upside, while Spain and the EU remain at loggerheads about the country’s 2012 budget deficit.
Brent prices continue to put upwards pressure on prices in euro and Sterling terms, while in US dollar terms they also remain fairly well underpinned.
Oil prices on the US measure have also had a good day on the back of the positive economic data out of the US.
Gold prices continue to trade sideways either side of the $1,700 level struggling for direction while copper prices have also found support from the much more positive risk bias in the markets today.
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By Micheal Hewson, Analyst, CMC Markets.
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