So the markets have not got over the headache of the Middle East and things look like they might start to turn nasty, not just in Libya either.
Gaddafi started to mobilise what remains of his loyal military forces and has been attempting to regain some sort of power. Anyone watching the BBC’s recent interview with the Libyan “leader” will think that he is completely detached from reality and as such capable of anything. This is not the sort of thing equity markets like and so investors remain on a cautious footing with yesterday’s move lower having something of a bearish tinge to it.
With reports that protests in Iran are being quelled causing deaths amongst protesters and the threat of contagion within the region still very much alive equity markets are struggling to hold onto gains. Stock markets across the Middle East sold off aggressively yesterday and this overshadowed anything good in terms of economic data or corporate results.
Yesterday’s speech by Ben Bernanke didn’t have as much of an effect on the markets as traders were focusing on the price of oil as opposed to the dovish remarks he made about having little concern for the recent spike. Unfortunately, the market has different views and yesterday saw a late jump in the price of crude.
The FTSE is suffering this morning after a poor session from Asian markets and already we’re testing the lows marked last week when the Libyan panic was just setting in. So the 5850 and 5800 levels are crucial support for the index now which the bulls are hoping we can hold onto. A break below here could open up a move to as low as 5525.
Not that it might make much difference to shift the focus from the Middle East to the macro aspects of the UK and US but economic data today comes in the form of the US’s prelude to Friday’s non-farm payroll with the ADP number and then later the Fed’s Beige Book. Private sector employment (the ADP number) is expected to show a rise of 170-190, just down on the previous month. The ADP has been consistently higher than the Friday figure in the last couple of months, which is somewhat complimented by the quite good recent business and consumer surveys, so today’s number oughtn’t to surprise to the downside. Later the Beige Book should continue to show improvements in the regions as it has done over the last few reports and evidence does suggest that manufacturing, retail and consumer confidence continue to improve.
So really the markets should look ahead to this data with optimism and enthusiasm, but the focus is elsewhere for the time being.
Currency markets were relatively muted in yesterday’s session despite the sell off in equities and even the Swissy didn’t make the usual gains expected with such a decline in indices. EUR/USD bumbled along above 1.3800 and at the time of writing the rate is back below there at 1.3775. Resistance is seen around the highs at 1.3860 and then 1.3925 with the big figure 1.4000 almost in touching distance. To the downside support is seen at 1.3750 and then 1.3715.
Cable looked a little dizzy having broken through to new highs above the 1.6250 area to hit over 1.6300. At 1.6230 this morning bulls will be keenly watching the highs at 1.6335 and then 1.6390 whilst to the downside support should at 1.6195 and 1.6150.
Gold traded to a new nominal all time high last night and continues to gain momentum as things in the Middle East continue to look messy, but just this morning there’s a little profit taking as we’re down a few bucks at 1429.
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