Greater London, England -- (SBWIRE) -- 01/18/2011 -- Sean Power is Equity Analyst at financial spread betting provider City Index (http://www.cityindex.co.uk/). Here, he takes a look at the EU markets on 14th January, with news of a FTSE decrease.
"Equity markets struggled to recoup loses following China’s mid-morning act of raising their reserve ratio requirement by 0.5%.
Hinting at a possible slowdown in demand for metals, mining stocks quickly felt the pain of China’s move and dragged the FTSE abruptly lower around the halfway stage today. Rio Tinto posted an intraday low of 4390.5p (down -113p or -2.5%), Anglo American 3271p (down -139p or -4%) and Fresnillo 1478 (-80p or -5.1%). Whilst the low on the UK index itself was 5948.47, down -75 points, around midday.
The banking sector was also weaker today following China’s decision, bucking the recent positive sentiment towards UK banks. Having had a good run this week investors decided to bank some of their well earned profits – excuse the pun. Barclays, Royal Bank of Scotland and HSBC all traded lower earlier today but have since shown signs of resilience following better than expected numbers from JP Morgan. The US heavyweight beat analysts’ estimates on EPS at $1.12 (exp $1) and revenues at $26.72bln (exp $24.37bln).
Equity markets attempted to reverse their early morning losses following US macro data at 1.30pm; Dec CPI was 0.5% (exp 0.4%) and Advance Retails Sales at 0.6% (exp at 0.8%). Also at 2.15pm we had Dec Industrial Production at 0.8% (exp 0.5%). The data seemed to spark a mini revival but unfortunately it was short lived as the University of Michigan Confidence at 3pm failed to meet expectations at 75.5 and was slightly weaker at 72.7.
At 3.30pm equity markets were down but more importantly off their lows. The FTSE was at 5987 (down -36 points), DAX at 7055 (down -19 points) and the CAC40 at 3972 (down -2.7 points).
Although we had an early morning wobble we now seem to have found our ‘happy place’ for the weekend and seem content with a small down day (around -0.5% or less). This isn’t too unheard of following a strong couple of days for banks and miners - a little profit taking on a Friday afternoon can always be expected.
Today promised much but delivered little, I think investors were looking for JPMorgan to really kick the reporting season into life, and this could well have happened were it not for the Chinese reserve hike spoiling the party.
Although we still have potential to push on next week today’s early morning sell off was evidence that the market can easily be spooked. Hopefully equity markets will push on next week but investors should remain cautious as the tree may well get shaken again.
The FTSE's attempt to regain the 6000 level into the close of today's session provides enough clues to suggest that 6050 remains the target for bull enthusiasts."
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