Morning Call by Traders University

Yesterday, the FTSE 100 added 43.40 points to close up (0.9%) at 4,690.53. The FTSE hit a new intraday high of 4,729.58 driven by the strength of banks as the BoE announced a further 50 billion of QE. This announcement saw gilt futures soar. Weakness was shown among oil stocks, as US crude oil prices decreased by $1 to $71 a barrel. Yesterday, the Dow Jones industrial average dropped 24.71 points, or 0.27 % to 9,256.26. The S and P 500 Index fell 5.64 points (or 0.56%) to 997.08. Losses were broad based, with the consumer staples and telecommunications services sectors among the biggest losers. The Nasdaq fell 19.89 points to close at 1,973.16. Investors in the US were cautious ahead of the critical government report on July employment and took profits after recent gains.

US retailers reported their eleventh straight month of sales declines for July yesterday, but data showed that jobless claims fell last week, fanning hopes that the job market may be stabilizing. The BOE shocked the markets yesterday with an unexpected increase of its quantitative easing program to $175bn. The bank said that the recent recession appears to be deeper than thought and that while recent data suggested that a recovery in output was near credit conditions remained tight. RBA issues an upbeat assessment of the Australian economy. Their previous stance was seen as pessimistic by many so this readjustment was positive. German June trade surplus has come in better than median forecast of 10.6 bn. Assets invested globally in exchange traded funds have reached a record high of $862bn on the back of the partial recovery in stock markets and the continuing strong demand for passive investment, according to data from Barclays Global Investors Global exchange-traded funds (ETF). The value of global ETFs plunged from $805bn in April 2008 to $711bn at the end of last year as the global recession hit stock, fixed income and commodity markets, the FT reports.

Yesterday Sterling fell more than a cent against the dollar after it hit a nine month high earlier this week; after the BOE decided to keep interest rates at 0.5% and increase its QE from 125 bn to 175 bn. Cable has opened slightly lower today and is still pushing lower at present, currently around the 1.6757 mark. EUR/USD has slipped lower in early European trading, presently at 1.4353. There is resistance at around 1.4452. This has been fueled by comments from ECB’s Trichet, stating we’re still in a period of economic contraction, freefall is over, but we must remain cautious.

Today Gold is at 962.00 USD, Brent Crude is at 74.89.53 USD and Copper is currently at 272.45 USX. Oil has already risen by a third this year and there are concerns as sugar also reaches a 28 year high, up 65% since January.