Greater London, England -- (SBWIRE) -- 09/15/2010 -- Joshua Raymond, Market Strategist, City Index commented:

““Elements of selling made its way into the market for the first time in four trading days forcing the FTSE minimally lower in trading on Tuesday. By and large however investors have taken a pause for breath ahead of the important US retail sales figures, due out at 1-30pm GMT, which will provide further clues as to the strength of the US economic recovery.

Sentiment, at least in the short term, has been largely M&A and data driven. The last few weeks has seen M&A speculation continue to come in thick and fast, which has brightened outlooks for a number of sectors, whilst the Basel III ruling and yesterdays China data continues to keep traders in bullish moods. Today, we have seen a bit of a pause for breath with traders waiting to see further evidence of a stronger than expected US economic recovery and there are hopes that today’s retail sales data for August could do just that.

The Basel III news and higher risk appetite continues to trigger buys for banking shares, with Royal Bank of Scotland and HSBC both posting gains and in the process outperforming both Lloyds and Barclays, who have seen some small elements of profit taking today.

On the downside, tobacco firms are the weakest performers on the FTSE 100 today, with the sector down over 1% having hit a new 6 month high yesterday. Imperial Tobacco is the worst performing stock in the sector, down by 1.2%.

Tui Travel shares fall on downgrade
Share in Tui Travel have suffered today with traders taking their lead from a downgrade by Bank of America/Merrill Lynch. The investment bank downgraded their stance on Tui’s shares to neutral, from a buy, and lowered their price target by 15% to 230p. Tui’s shareholders have also reacted poorly to the fact that in the same breath as their downgrade, BoA/Merrill Lynch repeated their buy rating on competitor Thomas Cook Group.

Indices nearing resistance levels
The bulls have the momentum and traders are looking for excuses to build on positions, not sell out of them. When you have that sort of positive mental attitude, stocks are always more likely to rise. That said, the S+P 500 is less than 1% of key resistance levels of around the 1130 mark whilst the FTSE is stepping closer to the 5610 level. Historically we have seen sellers come back into the market here so if data does start to turn negatively, we could see key Indices retrace back into their summer trading ranges.”

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