Morning Call by Traders University

Yesterday, the FTSE 100 ended 24.24 points lower (down 0.5%) at 4,647.13. The weaker than expected data in the US dragged the equities lower, with oil producers and miners leading the losers. This has caused investors to shift into Finance (up 1.56%) and also Consumer Cyclicals (up 1.19%). Yesterday, the Dow Jones industrial average dropped 39.22 points to close at 9,280.97. The S and P 500 Index fell 0.29 points to close at 1002.72.The Nasdaq Composite Index fell by 18.26 points to close at -18.26. The weaker data from the services sector and private payroll knocked recent US optimism and the market finished off low as investors ventured into riskier financial shares.

BDO Stoy Hayward has announced that Private equity and trade M&A has fallen for the sixth successive quarter in a row with half the number of deals being completed in Q2 2009 compared to the same period in 2008. With UK manufacturing and construction surveys rising strongly, hope has been raised for a rising GDP in Q3. In addition a strong report from the Halifax has suggested that house prices are stabilizing and the recent Services sector purchasing managers index has jumped to 53.2 suggesting a return to growth. A worrying factor for the UK at the moment is the weak M4 money supply growth rate, which could affect the QE plans of the MPC today. Government data showed that orders received by US factory’s unexpectedly rose in June, advancing for a third month in a row. While factory orders data was strong, reports on the services and labor markets were weaker. Yesterday, Eurozone retail sales fell unexpectedly in June pointing to a weak consumer demand. Retail trade was expected to rise 0.2% but instead fell 0.2%. Today the ECB is expected to keep interest rates on hold at 1%. Swiss consumers are not feeling too confident these days. Market will be looking to Trichet for hints regarding quantitative easing and monetary policy bias. The Swiss consumer sentiment index fell to -42 in the Q3 from -38 points in the previous quarterly survey. The result is pretty much in line with the median forecast of -43.

Yesterday, it was a nine month high for the Sterling which rose to $1.7039 after industrial output recorded a surprise increase. Cable has ticked higher in early European trade, but is presently at 1.6983. General sentiment is against the Bank of England quantitative easing program, will lend cable some support. Technical resistances now come at 1.7025/30 and then 1.7045/50. The dollar weakened on worse than expected US job losses. Despite an awaited ECB rate decision; EURO/USD has remained fairly stable at around the 1.4408 mark.

Today Gold has dropped - 0.1% to 964.40 USD, Brent Crude has remained stable today at 75.53 USD and Copper is currently 277.60USX.

Due for release today there is a variety of important releases, EUR German Factory Orders, EUR German Factory Orders, GBP Bank of England Interest Rate Decision, EUR European Central Bank Interest Rate Decision.