Greater London, England -- (SBWIRE) -- 11/03/2010 -- Joshua Raymond, Market Strategist, City Index (http://www.cityindex.co.uk) commented:

“EU Indices saw gains of 1% lose ground in the afternoon session as traders reduced their longs ahead of tomorrow’s potentially crucial US third quarter GDP reading. In what proved to be a rather choppy session, the FTSE 100 remained rangebound, finding support around the 5640-5650 level to post gains of 0.4% going into the close.

A weaker US Dollar had helped to charge European markets higher in the morning session. A weak dollar means that for those that key commodities priced in USD become cheaper for those that hold other currencies and as such, metal prices gained ground which in turn induced higher demand for the key miners and energy firms.

A better than expected set of results from oil giants Royal Dutch Shell and Exxon Mobil Corp have helped to push energy firms higher. We have also seen buyers come in to pick up shares of telecom giant Vodafone after peer France Telecom announced forecast beating results.

As the afternoon progressed however, we started to see investors remove elements of risk from their portfolio’s in case equity markets react negatively to tomorrows US GDP figure.

US GDP the focus
There is a huge focus towards tomorrow’s first reading of US third quarter US GDP, particularly in the context of the uncertainty there now is regarding the scale of the quantitative easing set to be announced by the Fed next week. Tomorrows GDP reading could be the last clue the market has to guess what the size of purchasing power the Fed outlines.

In what has increasingly shown to be quite a perverse market of late, weaker growth could actually delight investors as it may force the Fed to increase the amount of QE they are set to announce next week. On the other hand, stronger quarterly growth than the 1.2% expected by the market could trigger investors into cashing in their gains after a strong equity run fearing that QE could be smaller than previously hoped.”

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