US markets continued their impressive winning streak into a second day, as traders blithely ignored the lack of good news from Europe in order to focus on fleeting hopes of a solution to the Eurozone debt crisis.
By 4pm (London time), the Dow Jones had rallied 2.6% to 11,326.16, while the S&P 500 had gained 2.45% to 1186.80. In London, the FTSE's strong uptick continued, with the leading index pushing up 3.7% to 5281.16.
US data still weak, but rally continues
US consumer confidence was little changed in September, providing little fodder either for bears or bulls in today's market.
As is so often the case, the really important data was buried in the sub-indices; the response to the 'are jobs hard to get' question was 50, up from 48.5, hitting its highest level since 1983.
There was a discrepancy between this and the forward expectations gauge, with the six month outlook rising to 54 from 52.4, but in all honesty the reading has been broadly ignored in the global 'risk-on' rally that has taken place today.
For now, despite all the negative comments that are emerging from Europe, the general direction of stock markets remains up. Risky assets have rallied all day on hope and expectation that, after so long, Eurozone politicians will finally cobble together a meaningful response to the debt crisis.
This has prompted a continuation of the major swings in equity markets that have become the norm for the past few weeks, as financial spread betting markets surge and then fade on various hopes about the global economy. If we take a step back from all of the activity, we can see that markets are pressing higher, but only towards the levels seen last week.
At the end of August, the gains in stock markets were pinned on 'bargain hunters' and 'end of the month rebalancing' among portfolio managers. As the end of September draws to a close, this latter explanation is being recycled, along with 'end of the quarter rebalancing'.
This may have an element of truth to it, but hope and fear, the traditional drivers of markets, are the key element overriding all other considerations.
Last week, fear was in the ascendant, but since then hope has reasserted itself. Whether this can continue is another matter.
Risk appetite and gains on stock markets have been fragile and transient for some time now, and if the market suddenly wakes up to the denials being issued by Eurozone politicians about any increase in the size of the EFSF, then the sell-off could indeed be quite dramatic.
Mitchells & Butlers continues bid defence
Meanwhile, in the real world of companies, pub group Mitchells & Butlers (M&B) was down 2.4% to 246.4p after it said in its trading statement that it would reject the latest offer from billionaire shareholder Joe Lewis.
As was probably to be expected, M&B said that the offer significantly undervalued the company. It also said that like-for-like sales were up 2.7% for the year but that energy, duty and food costs were also on the increase.
Whether this is because yesterday was a 'down' day is hard to say, but optimism is certainly plentiful at the moment.
Silver, that most exciting of raw materials, is leading the way with a 9% gain to $32.67 per ounce, which is even more impressive when you consider that its low yesterday was in the region of $26.35 per ounce.
Gold is up 4.5%, moving back to a price of $1666 per ounce. Oil, copper, palladium, platinum and soft commodities are all racing away, as a weaker US dollar also plays its part in pushing risky assets higher.
Remember that financial spread betting is a leveraged product and can result in losses that exceed your initial deposit. Spread betting may not be suitable for everyone, so please ensure that you fully understand the risks involved.
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'Commodities Spread Betting: Silver Surges 9 Percent', Article by IG Index, last update: 27-Sep-11
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