Morning Call by Traders University

The FTSE 100 Index ended the day up 5.3 points at 3989, after trading above the big number - 4,000 at times during the day. Banking stocks took the lead from strong first-quarter profits from Goldman Sachs, the Wall Street investment, overnight. Lloyds Banking Group and Barclays both posted double-digit percentage gains, adding 8.4p to 87.9p and 18p to 195.5p respectively. However, news of unexpected declines in retail sales and producer prices offset optimism from Ben Bernanke, chairman of the Federal Reserve, that the economy’s slump may be slowing.
Wall Street moved into reverse yesterday after a surprisingly weak retail sales report punctured investors’ optimism about the economy.
The poor sales data, combined with a sharp drop in wholesale prices, came just as the corporate earnings season, usually a volatile time in the market, got under way. The Dow Jones industrials lost nearly 140 points. Underlining the market’s sensitivity, shares in Intel Corp. fell sharply in after-hours trading yesterday after the chipmaker reported weaker results and didn’t offer a forecast for revenue.
Financial stocks tumbled after Goldman Sachs Group Inc. announced strong profits but said it would raise $5 billion to repay government bailout money. Investors speculated that other major banks might follow suit, which would put pressure on their stocks. Citigroup Inc. and JPMorgan Chase & Co. are also due to report results this week. The Dow closed down 137.63, or 1.7 percent, at 7,920.18.
The week has started on a positive note for markets across the globe, after traders came back from Easter celebrations in a joyous mood. Yesterday the European markets were still closed and therefore liquidity was thin and moves were more extreme than normal, with GBP/USD making an impressive rally towards 1.49. The first earnings results were positive for Goldman Sachs and also Citigroup, however traders are not convinced yet as to what the next day’s releases will mean to the current fragile economic environment. At 1:30pm USD high news with Core CPI and 2pm TIC long-term purchases with the latter expected to be much better than previous forecast. Watch out for volatility during these times.