Markets broke through in Europe to higher ground in yesterday’s morning session and then tried to drag the US along (on a quasi US bank holiday). The S&P 500, the mother of all indices, managed to print 1080.3 all of 0.4 of a point through the traded high of last month before the effort proved too much and down we came again! The Dax and FTSE remain above the resistance levels of 5760 and 5195 this morning but it has to be admitted that they are not exactly looking comfortable perched as they are on top of the parapet just waiting for somebody to take a pot shot.

Clients have been selling heavily this morning into anything even remotely looking like a tick up and the spike on the open up to 5215 currently looks like it might have been a ‘god send’ for bear position takers. With Sterling continuing to weaken some strength in the FTSE is to be expected merely on a global parity exercise. Some 70pc of the business of the FTSE 100 is apparently non-domestic while many of the costs are in Pounds, this makes many UK stocks look remarkably attractive to foreign investors. Conversely the Dax in Sterling terms is actually very close to its all time high! Forget the bear market. For a UK investor in Germany the all time high was in July ‘07 when the Sterling conversion of the Dax was at 5490, it is currently at 5395 on the same basis, less than 2pc off the peak. For a German investor in the FTSE the story has been very different (of course) but recent data shows that foreign buyers of UK stocks have (for the first time) exceeded domestic buyers (pension funds etc) The UK looks to be a popular place to invest just for the moment.

Whitbread made jolly reading for investors this morning with an 81pc increase in profits. Total revenue was up 3.1pc in sterling terms (just as well they don’t report in Euros!) and the Stock has now recovered to a quite respectable degree. The technical rally (on tax issues) of late ’06 and ’07 on is still a way off but on fundamentals (i.e running their various businesses) the stock can be said to be riding high. Since the start of July the price has risen from 800p to the current 1320p and is now above the price of 01/01/08. 1400 looks to be quite a resistance level though and we might see some profit taking if we approach this level.

Corporate reporting seems to be going along very nicely so far with very few flies in the ointment. With rates expected to stay low debt management is taking something of a back foot and while there is a certain amount of corporate issuance with debt repayment in mind the urgency to do this seems to be dwindling.

Sterling is suffering again this morning with the Euro cross reaching a new 7 month low at 1.0625 as more and more traders pile out of the poor old pound. In truth (as we have commented here many times) there is precious little incentive to buy sterling with both macro and micro economic indicators pointing to a dire situation. Our political masters continue to fiddle while the currency burns and with every day of delay over the difficult decisions the situation gets worse. A massive structural level of unemployed looks to be the legacy of the Labour years.

With Oil and many other commodities drifting higher (in dollar terms) every day I fear that a harsh winter may be coming for those not in employ and with very little in the coffers to cushion the blow (in fact both political parties look to be targeting the weakest for the cuts) serious tension on the streets may be the outcome in the back end of 2010.

Oil has made it over the 72.50 and 73.20 resistance levels and we must fear that there is some pressure for a renewed attack on $75. As mentioned several times over the last week or so the pressure appears to be to the buy side and Crude is looking ominously as though a sharp sift higher might be in the offing. Traders are looking to be cautious at these levels as, although, they have been rejected in the past this was back in August after a long rally through July.

Gold is also pressing higher as no reaction sell off seems to have occurred. Gold is now almost a random market with no real basis to work with. A pure supply and demand in the sense that supply and demand is just a financial instrument rather than the bullion itself! Domestic demand for the metal has actually been falling for several years its attraction appears to solely as a measure of worth rather than anything else.