A bit of a grim opener today, as the fall-out from the Goldman Sachs announcement last week continues to dominate headlines. Coupled with this, is the volcanic cloud problems afflicting airlines and the fact that the Lib Dems may well have a bigger hand in the election than had been predicted.

While this commentator is not as negative on a hung parliament as some, this would be predicated on the Libs having a very small voice. If they have more than a nominal role, then their policies can do little to help Britain out of its current malaise, as they are mainly based on giving even more hand outs and taxing the top end. Politicians seem to believe that business and high earner will just sit back and do nothing in the face of attack. In today’s world, income and expenditure can be transferred across the globe, to the detriment of any administration trying to grasp more than its fair share.

Other than this, the reaction to the GS news seems a little overdone as the prosecutors seem to have built their entire case on an e-mail, which even I could defend against without too much difficulty. Attacking businesses for being clever seems a very strange action and the idea that professional trading units can sue others over their own non-comprehension of an instrument that they freely traded in is also dubious. No one forced the banks to buy the products … they bought them because they thought it was easy money!

The FTSE is quoted 15 lower at around 5730, having traded as low as 5706 in very early pre-market action. While this appears to be a retreat in reality, we are still very much in the bull arena and are trading just 100 pips from the year’s high. In times past, that would be considered just a small daily reversal. This said, the bulls would feel a bit more comfortable if we could close this evening above 5740, as the short-term trend support goes through at this point. Although we did hit new highs last week we have, really, been moving sideways for most of April, with minimal action in either direction.

The S&P has also given up the 1200 level, but the Dow is clinging on to 11000 as I write. Confidence is still reasonably strong, but as can be seen it only takes one piece of news for the steering to go a bit funny. Citigroup will release earning later today, which are expected to come in flat to slightly positive; anything better than this may go someway to divert interest from the GS news.

On the currency front, the Pound has come in for something of a battering as a media obsessed Britain voted a politician, who has actually never done anything except look good on TV, as being more popular than Churchill. One feels that this is as good an indictment of the educational standards in the UK as anything else you might read. Of course you never know what is going to happen, especially if the Lib Dems get some traction on events. If a sense of flow from the two major parties really takes hold, then we could be in for a really historic event.

Cable has dropped to 1.5225, giving up over 1½ cents over the weekend, as the cross has continued to reverse the generally positive flow of the last few weeks since the end of the Clegg/Cameron/Brown debate. Investors will not like streams of news showing unexpected results and dealers will avoid uncertainty. A new party in power for the first time in a century does fall into the category of ‘uncertainty’.

The Euro has also come under pressure, breaking back under 1.35 again vs. the greenback. 1.3425 is support, but we do not look like challenging this just yet with the cross currently trading at 1.3455. A close below 1.3510 might be taken as a sell signal, so traders should be aware that if we are still down here late in the session then sellers might accumulate.

Gold has also suffered in the fall out, with the 1140/42 support being broken on Friday’s fall out. We seem to have confirmed the failure of the attempt to move higher, having seen 1160/61 prove too much, for the moment, for a closing break. Oddly enough, the move on Friday might be considered strange, as the Yellow metal might be considered a buy in times of tension. Of course, Poulson (who is mentioned heavily in the Goldman case) is reported to be heavily long on Gold and problems on the legal front may cause problems.

Oil remains under pressure as well, with June Nymex dropping a buck-and-a-half so far. Having expelled so much energy getting above 82/83 bucks, it would be a very poor moment if the break out earlier this month was so easily defeated. A close below 83 may be a very bearish signal, so buyers should be cautious.