Morning Call by Greg Secker

FTSE 100 closed down 131 points yesterday at 4,507. In an interesting news release the Government has denied reports that it’s considering printing more money as a tactic to tackle the credit crunch. Treasury sources said that while the move has not been ruled out, it is not currently on the agenda. The Bank of England is widely expected to cut rates today by 0.5%. They are currently 2%. If this cut is announced it would mean rates are at their lowest point in the Bank's 315-year history because ever since 1694, when the Bank was founded, its main interest rate has never fallen below 2%. The Dow had a weak day yesterday falling well below the major level of 9,000 level. The index dropped steadily throughout most of the day and eventually closed the session with a loss of 245 points. Today's decline could lead the index back toward prior support at 8,370, especially if 8,700 doesn’t form support. Interestingly the Dow bottomed out precisely at the 50% Fibonacci Retracement level of 8,725 before rallying 50 points into the Close. If the Dow remains above this level it’s possible that we could see another test of the 9,000 level again very soon. This fall yesterday may well have been triggered by the warning from Intel about poor business conditions and more evidence of rising unemployment. This news upended some investors’ hopes for a speedy economic recovery this year and sent the major stock indexes down more than 2.5%. Intel’s second warning since November, as well as bleak outlooks from aluminum producer Alcoa and media industry bellwether Time Warner, underscored the breadth of the economy’s slowdown. The ADP National Employment Report said private sector jobs fell by a greater-than-expected 693,000 in December. This has made investors nervous ahead of tomorrow’s Non-Farm Payroll. Today we are expecting an interesting day on the Markets because the Bank of England Monetary Policy Committee are announcing the Interest Rate decision at 12:00 noon. Then at 13:30 the US unemployment claims are due. This figure is significant because it’s one of the first major news releases, however it is considered by many as a lagging indicator.