Investors remained perplexed as to whether to build on equity positions or not as we head into the end of the quarter and a long bank holiday weekend.
The mining companies are looking stronger yet again, with the sector benefitting from stronger Copper prices. Were it not for the miners, European Stock Markets would be trading negatively.
In London, the FTSE 100 briefly hit a new 21-month high on Tuesday but the gains quickly retreated as the banks dragged Stock Market Indices lower.
UK Revised GDP Better Than Expected
The final revision of UK GDP for Q4 came in better than expected but had largely little effect on equity markets.
It is clearly good news for future growth that Britain emerged from its worst post war recession stronger than expected. Nevertheless, there remains a lot of uncertainty as to whether this momentum can carry and future GDP predictions are fluctuating on a monthly basis.
Greek Bonds
The Euro was buoyed by news that Greece managed to sell 7-year bonds. Note that the sale was at over a 300 point premium to the equivalent German bonds.
This was the first sale since European leaders agreed last week on a plan to support Greece, as the country works to lower its deficit.
Despite the good news, any upside for the Euro will remain capped due to a change in Euro/US Dollar yields which are now turning in the Dollar’s favour.
The UK Remains AAA Rated
Sterling has also firmed slightly after ratings agency Standard and Poor’s reaffirmed that it would not change its view on the UK’s triple AAA rating ahead of the forthcoming election.
S&P did keep its negative outlook on the UK, which it first put in place in May 2009.
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Good luck with your trading.
HT