Morning Call by Greg Secker

Stocks were sharply higher after the Bank of England kept rates on hold and expanded quantitative easing but retreated in volatile afternoon trading, tracking weakness in U.S. stocks following downgrades in the telecom sector. Britain’s FTSE ended 2 points higher at 4,4398 after touching a high of 4,520 for the session. It is in positive ground for the third straight day. Weakness in stocks of telecoms heavyweight Vodafone swept away early gains from optimism on the outcome of U.S. bank ’stress tests’, leaving Britain’s blue chip index flat at Thursday’s close. Mic Mills, a trader at spread betting firm ETX Capital reported that the afternoon was just a matter of everything being overbought and a bit of profit taking occurring. Trade was heavy with 163 percent of the average volume of the last 90 trading days transacted.

Stateside, Wall Street slid yesterday following a surge earlier in the week and as traders awaited the release of the government report on the nation’s biggest banks (the ‘stress tests’) and for April’s Non Farm Payrolls released later today. Stocks began the day higher but quickly reversed as investors looked past upbeat reports on the job market and retail sales and decided to cut their holdings following what had been a 4.8 percent gain this week for the S&P 500.

The Dow ended down 102.43, or 1.2 percent, to 8,409.85 yesterday, a day after the blue chip jumped 102 points to close above the 8,500 level for the first time in four months. The S&P 500 index fell 12.14, or 1.3 percent, to 907.39, and the Nasdaq composite index fell 42.86, or 2.4 percent, to 1,716.24.

This is a high news day for Forex, so traders should steer away from trading. At 9.30 we see the GBP PPI Input (Producer Price Index) numbers released, previously 1.0% and forecast at 0.7%. At 12:00 we see news from Canada, with Unemployment Rate figures, previously at 8.0% and forecast at 8.3%. Simultaneously, numbers for Canadian Employment Change are released, previously -61.3K, expected at -48.5K, and also Housing Starts, previously 147K and expected slightly down at 140K. At 13.30 we have the highly anticipated US Non-Farm Payrolls numbers for April, previously -663K and expected at -590K, better than previous.