FTSE Here We Go (Down) Again

Published by Filipe R. Costa on Fri, 04/03/2011 - 16:49
FTSE down again

Equity markets were able to recover yesterday, with the FTSE marking a 1.52% gain and the Dow 1.58%. Today, the FTSE opened higher, starting the day testing 6020 points and edging as high as 6052. At 1.30pm markets were shaken by unemployment and non-farm payrolls data coming from the US Labour Department. The unemployment rate decreased to 8.9% in February from 9.0% in January and was a positive surprise since markets were expecting 9.1%. Non-farm payrolls rose by 192,000, a positive rise and above expectations. We have been assisting to very positive data from the US over the last couple of weeks. The biggest economy seems to be finally creating jobs in a consistent manner. Investors’ reaction to those reports was mixed with US futures going first up and then down, showing investors are still very sensitive to any news given the cloud coming from the Middle East.

Right after US markets opened, the Dow edged lower and the FTSE started a downhill race losing 40 points in less than an hour, something that we are being used to in last days, with yesterday’s exception. In the end, the FTSE closed at 5989, losing 15 points.

Gold is still on the upside, with investors trusting in the metal to safe guard their money. Higher inflation rates, oil highs, and political instability are all ingredients that only lead to a very tasty recipe of gold.

In currencies market, we are still assisting to a degrading USD, constantly touching minimums against the Euro and the Pound. Today the EUR/USD pair touched 1.40 terrain.

Oil markets are rising fast. US Crude touched 104, something not seen since September 2008.

This was an agitated week for markets and although we have been assisting to high intraday volatilities, equity markets are really lacking direction. Economic data point them higher, instability in Middle East and rising oil prices point them lower. The final effect is more on the volatility side than in price.