Morning Call by Greg Secker

Yesterday, the FTSE 100 closed 0.9% higher I closed 40.77 points higher at 4,685.78, this was led by gains from banks and miners which recovered from losses in the previous session. Yesterday, the Dow Jones industrial average was up 82.60 points (or 0.9%) at 9,217.94. Yesterday, the Nasdaq Composite Index was up 25.08 points (or 1.3%) at 1,955.92. The S and P 500 index was up 9.94 points or 1.01% at 989.67. Better than expected results from big retailers urged investors back into the market. European stocks inched up on Tuesday as the main indices covered lost ground during Monday’s session when markets hit a four-week low.

According to Knight Frank head Richard White, the property downturn has now reached the bottom. Tesco, the UK’s biggest retailer is continuing to lose market share. Tesco saw its market share of the grocery sector fall over the 12 weeks to August 9 as competition among the supermarkets intensified. Unexpectedly Inflation held steady in July. The CPI (consumer price index) was unchanged from June, keeping an annual rate of 1.8%. However many economists are still warning that deflation looms. Investor confidence in Germany, rose sharply this month as hopes grew that the economy will recover faster than expected. US producer prices fell by a larger-than-expected amount in July and notched up a record decline compared to a year earlier. The Labor Department said that the seasonally adjusted index for prices paid at the farm and factory gate dropped by 0.9%. The recovery has begun – although recovery will be unpredictable and protracted, according to the International Monetary Fund’s chief economist, writes the Telegraph. “The recovery has started,” claims Olivier Blanchard in a paper to be published by the IMF on Wednesday. Corporate Bond issuance has risen to a record £1,103 billion in 2009, with four months of the year to go. Investors have moved their cash into corporate bonds because they offer higher returns than low interest rates on bank deposits and savings accounts. The telegraph reports that China and Australia have signed their biggest ever trade deal with PetroChina, they have agreed to buy A$50bn (£25bn) of natural gas produced by ExxonMobil.

Cable is down in early trade, presently at 1.6489. The move comes with risk aversion picking up as Chinese stocks again come under heavy pressure. This could have been affected by comments made by the next UK Prime Minister David Cameron that the British Government could default on it’s debts. EUR/USD has slipped back in early European trading, giving up some 25 points, presently at 1.4097.
This morning Gold is at, 939.00 USD, Copper 271.40 USX and Brent Crude 71.87 USD. There is fear is that fiscal stimuli flooding into the global economy will result in too much cash chasing too few grains and therefore causing higher prices. Sugar prices have been pushed to their highest level in three decades due to Global shortage, prices of soyabeans and corn have languished due to optimal summer growing conditions in the US Midwest.
Due for release today there are the GBP Bank of England Minutes, CAD Consumer Price Index, CAD Consumer Price Index, CAD Bank Canada Consumer Price Index and CAD Leading Indicators