The Budget is over (for what it was worth) and I suppose that we can at least be pleased that the much feared increase in capital gains tax was not forthcoming (although as a spread betting company we would, of course, have been pleased to see more day-light between SB trading and regular financial transactions).

The argument that it has been the financial crisis that has created the budget deficit does not really stand up to analysis as the UK indebtedness increased in the period 2003 to 2007 from some £325bln to over £500bln (55pc!) in a pretty steady increasing line. It must be remembered that this increase in the deficit was in a period of ‘economic growth’ for the UK and we were therefore always in the perilous position of having unsustainable government spending commitments in the event of any kind of slowdown.

In the post 08/09 period of higher banking capital requirements (and continued politically inspired hatred of all things City based) the idea that the UK or Europe will be the favoured economic arena for international capital is fanciful in the extreme. Unless some of the more extreme regulatory requirements are withdrawn I fear that, in the long run, the UK will be stuck in a jobless recovery of 1 to 2 pc growth, at best, year after year.

The FTSE is trading at around 5685 as I write and seems comfortable above the 5650/60 level for the moment and the one attempt yesterday to sell off was quickly defeated. This said it must be admitted that as soon as we approach 5690/5700 the sellers seem to come out in force so we might anticipate a real battle over this resistance area through today session. If a foothold is achieved above 5700 we may see some short covering pushing the markets sharply higher BUT if we continue to be held back the opposite may well become more probable as longs begin to cash in some profits.

The US market continues to be the big winner of recent months with the Dow and S&P clearing for ever higher closes (aside from yesterday’s small sell off). Since early February there has been no significant pull back in the S&P as we have climbed in a steady line from 1050 to the current price of 1170. Returns in equities continue to look reasonably attractive against cash although long dated sovereign debt is beginning to challenge for the beauty queen tiara as fears over future inflation problems and possible debt gluts push up yields.

While equity markets remain moribund the action in the currency markets have been the place to play with the Euro hitting new 10 month lows versus the dollar with the Pound and the Yen in similar retreat against the resurgence of the Greenback.

The Euro hit an overnight low of 1.3283 and has bounced slightly from here but in must be admitted that the support has appeared pretty anaemic so far. Overall poor Euro Zone news is not helping (quite apart from the Greece, Italy et al problems) with Germany apparently slipping back into zero growth (or possibly even negative) and this must be worrying for the various central bankers across the EU and UK economic sphere. The pot for state sponsored economic support seems almost empty and any growth from the private sector will be severely squeezed by the ever increasing tax burden. Cable seems to still have support beneath 1.4950 all the way down to 1.4850 and dealers continue to pick up small positions whenever we get into this range.

As feared in Tuesday’s comment, the boost for Oil failed to give traction and $82/$83 remains a bridge too far for the markets just for the moment. While long term supply might be doubtful, it cannot be said for the current situation with inventory stocks reasonably solid and supply more than plentiful. If western economies continue to stagnate and general fuel economies continue to improve (new 4x4s now average over 30mpg versus around 23 a few years ago), we may find that in the short term we have more than enough to go around.