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Optimism abounds after positive US retail sales and eurozone talks

Nick Dockerty in CFDs 14 Oct 2011

Retail sales in the US climbed 1.1% in September from August according to data from the US Commerce Department. This is the biggest jump in retail sales seen for seven months and it’s helped the Dow Jones to add 100 points today already.  
 
Optimism has been growing surrounding the future of the eurozone too, despite a dramatic Slovakian refusal earlier in the week. Slovakia finally ratified the expansion of the European Financial Stability Facility (EFSF) to €440 billion yesterday, meaning that all 17 eurozone members have now approved the plan which seemingly clears the way for the recapitalisation of EU banks.
 
G20 finance ministers started a two-day meeting in Paris to discuss the final deal for the eurozone and EU leaders will meet on 23rd of October ‘to finalise our comprehensive strategy’ according to European Council president Herman van Rompuy.
 
Investors will be hoping that the momentum we’ve seen over the past week can be built upon and a final deal can be made that secures the eurozone’s future.

At 3.55 pm (London time) the FTSE 100 stood 65.19 points up at 5468.64.
 
Earlier in the week...
After their meeting at the weekend President Sarkozy  and Chancellor Merkel said they were in ‘total agreement’ and ‘are determined to do the necessary to secure the recapitalisation’ of those eurozone banks affected by the Greek crisis. But it was too late for the Franco-Belgian bank Dexia whose board had also met over the weekend to discuss its break-up.
 
The FTSE 100 ended Monday up 95.60 points at 5399.00 and the Dow Jones climbed to 11,433.18 as bank stocks led the way.
 
Slovakia ratifies eurozone bailout fund (well, eventually)
On Tuesday, the Slovakian parliament dramatically voted against extending the EFSF. The debate lasted all day during which the FTSE struggled for momentum but would end the day down only 3.3 points at 5395.70. The Dow Jones finished slightly lower too by 17.33 points at 11,415.85.
 
17-year high for UK unemployment; Minutes of meeting show Fed contemplating more QE
Unemployment in the UK has risen by 114,000 between June/August and now stands at 2.57 million up from 2.51. The figure was a highest for 17 years and was what the majority of analysts were expecting. 
 
The claimant count for unemployment benefit climbed again, by 17,500 to 1.60 million in September from 1.58 million previously. 'It is clear that we are seeing the effect of the international economic crisis on the UK labour market,' commented the employment minister Chris Grayling.
 
Also Wednesday, the US Federal Reserve released its minutes from its two-day policy meeting in September which revealed that a new round of quantitative easing as an option if economic recovery continued to slow. 

Despite the poor unemployment figures the FTSE 100 finished Wednesday up 46.10 points at 5441.80. The Dow Jones jumped an impressive 102.55 points to close at 11,518.85.        
 
Chinese trade slows
China’s trade surplus fell for the second month on the trot as the world’s second largest economy continues to be affected by the difficulties in the eurozone and the US. The Chinese trade balance figure for September was a surplus of $14.5 billion, with imports and exports both down – the figure was much worse than analysts were expecting.
 
China’s biggest trade partner, Europe, was the worst culprit, with exports to that continent rising at an annual rate of only 9.8% in September, compared with a 22.3% rise in August.

Unsurprisingly, mining stocks helped the FTSE close Thursday down 0.7% at 5403 and the Dow shed 40.72 points to close at 11,478.13. 


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Optimism abounds after positive US retail sales and eurozone talks

Retail sales in the US climbed 1.1% in September from August according to data from the US Commerce Department. This is the biggest jump in retail sales seen for seven months and it’s helped the Dow Jones to add 100 points today already.  

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