UK Market Trading
Spread Betting 17 May 2013
As the week ends markets are once again in the green, with the FTSE 100 up 30 points thanks to some better US economic data.
The end of the week looms and the picture for markets looks very similar on Friday afternoon to how it did on Monday morning: a relatively benign economic environment, showing some signs of recovery, backed by accommodative central banks.
We seem to have entered a utopia for investors; just enough good economic data to encourage nervous investors, but also sufficient bad data to keep central banks actively engaged in providing fresh liquidity.
This isn't quite 'never had it so good', but it is certainly a pleasant atmosphere.
This afternoon, both the Michigan confidence index and US leading indicators were ahead of expectations, nicely counterbalancing yesterday's slew of weaker data.
The FTSE 100 and S&P 500 have both gained around 1.5% this week, and with valuations still not too frothy we could be in for more gains around the world.
Leaving aside the Ocado-Morrisons news, today's pleasant surprise for the Treasury will be Lloyd's share price pushing back to the notional 'break-even' point for the government's stake.
Hardly the time to push the 'sell' button I think, but you could forgive the Chancellor for daring to hope that yet higher prices could be on their way.
A pre-election feelgood sale is not entirely impossible, but investors should leave political considerations to Whitehall.
The theme this week has been one of US markets dragging their unwilling continental cousins into positive territory, today being no exception.
A 200-point gain for the S&P 500 since the beginning of the year is no mean feat, but we are nowhere near bubble territory yet.
'Taper talk' regarding QE might scare investors for a while, but actions speak louder than words, and on this basis QE is with us for a long time yet.
A stronger US dollar has been given a boost by this talk of potential reductions in QE, and the broader dollar index now sits near a ten-month high.
This is good for imports to the US, allowing Americans to spend more, with today's Michigan index reflecting a steady rise in optimism.
If Ben Bernanke can manage the transition from ultra-loose to tighter monetary policy the 'almighty dollar' could be one of the themes of 2013.
Commodities Market Update
The scourging of the gold bulls continues unabated, with the metal falling to a one-month low.
Central banks sitting on large piles of the stuff looked pretty clever when the price was surging.
Now that it's falling I fear some might begin to reconsider their position, which could easily give rise to a new wave of selling.
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'UK Market Trading' edited by AG, updated 17-May-13
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