London, England -- (SBWIRE) -- 02/07/2011 -- Joshua Raymond is Market Strategist at spread betting and CFD trading provider City Index (http://www.cityindex.co.uk/). Here, he takes a look at the financial headlines shaping trader activity on 1st February:
“Investors continued to buy into heavyweight mining firms on Tuesday to help lift European indices from their lows after Copper prices hit another record high.
Whilst it may be somewhat short sighted to view the £200 million spent in the football January transfer window as a bellwether of the UK economic climate, we have had some strong corporate earnings and as long as commodity prices continue to swell, this is likely to maintain healthy demand for heavyweight miners which in turn will support the FTSE.
The weaker than expected reading is US Q4 GDP knocked the wind from our sails a bit last week but it seems that investors are still keen to use equity weakness as buying opportunities.
The FTSE 100 has now lost almost 5% from its highs to yesterday’s lows, which is a similar amount to the previous 3 'mini corrections' from June last year that helped to compliment the bull turn. In that essence, small corrections can be healthy for medium to long term equity demand. That said, we need the FTSE 100 to break back above the 6000 level again soon, or this could convince traders that a much stronger price correction could be looming.
Economic data the focus – UK manufacturing strong
We have a wide range of important economic data out this week, concluding with US non-farm payrolls and unemployment rate on Friday.
Today’s data has already proved to be better than expected, with UK manufacturing activity growing at a record pace in January, helping to increase demand for pound sterling which pushed immediately through the $1.61 level as a result. There was less of a reaction in equity markets, however, as surging factory costs continued to reaffirm inflationary pressures and as such increases pressure on the Bank of England to raise interest rates.
Later in the session the key focus for investors will be US ISM Manufacturing data, which is expected to slow mildly to 58.0. A strong reading could certainly encourage bull enthusiasts into the European closing bell.
BP shares fall 2% after profits lag expectations
Oil giant BP’s shares fell 2% straight to the bottom of the FTSE 100 company performance ladder today after the firm reported profits that missed market consensus and added another $1 billion to the total oil spill bill, which was unexpected. The oil firm, which endured a very difficult 2010 after the much publicised Gulf of Mexico oil spill, reported a net income of $4.36 billion which came in some way short of the predicted $5.09 billion. The company also restarted its dividend and whilst this is an undoubtedly welcome return, it had been long expected. The amount, 7 cents a share, is in line with what shareholders were expecting so there has been minimal uplift form this element in their numbers.”
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