FTSE And Cable Roaring While The US NFP In Focus

The FTSE100 is roaring today after the unexpected outcome of the exit polls which has confirmed that Mr Cameron has another round of leadership under his belt. The equity market and the cable, both are soaring and inflating like there is no tomorrow and investors are pouring their money in this trade.

Although, the final results or the outcome is still due, but according to the BBC projection, it is clear that both the Labour Party and Liberal democrats have never thought they can face a defeat like this given that these elections were expected to be the most competitive with neither party in majority. Clearly, the labour party’s manifesto wasn’t some thing which was according to the public’s appetite, especially not for investors who seems to know only one button when it comes to trading- Buy. The British pound had a very different trading pattern if we compare it to the previous election in 2010 during which we experienced a sell off going into the election and further sell off on the Election Day and the remaining episode came after the elections.

The UK’s economic data is also due this morning and it will bring more spot light on the imbalance in the trade balance numbers. The data is forecast to show a deficit of -2.4bn. The reading for the previous month was -2.8bn pounds. The roller coaster in the bond market intensified yesterday in Europe and in the U.S. and investor will continue to keep eye on this development. The German bund yield had their highest point yesterday since they started their downward spiral move and touched the highest point of 0.78%.

Moving away from the UK, Greece remain the main focus and there is still no signs of any fruitful outcome as both sides remain anchored to their own agenda. Next Monday’s meeting remain the main focal point and Tuesday’s 750 million payment to the IMF will be the major challenge.

Back in the U.S., it is the U.S. Non farm payroll data which is the main event of the day. A feeble reading will reinforce that the U.S. economy is still sleeping down however if we do get a strong and stout reading that will confirm that the seasonal weakness is fading away. The unemployment rate is expected to nudge down even further and the forecast is for 5.4%. The participation rate will be of high importance and any encouraging reading will be welcomed by the investors. The average hourly earnings data is also expected to rise and the forecast is for 2.3%.

Disclosure & Disclaimer: The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.

by Naeem Aslam