So the markets turn around once more.  What were we all worrying about?!

Equities have rebounded strongly and look firm going into the end of the month as the news flow continues to be supportive.  Most Euro zone nations (and the UK) are expected to propose serious budget controlling agendas and, while we can be quite concerned about the effects of all of this on future growth potential, markets seem happy to give them the benefit of the doubt.

The FTSE is trading almost unchanged on yesterday’s close at 5200, having reached 5240 in overnight dealing. We are now back at the old trading range which dominated the end of 2009 between 5150 and 5400, but it must be noted that extreme conditions are hardly likely to just ‘disappear’.  The Dows huge rally from under 10000, rejecting the 9900 level with a vengeance, was welcomed by our clients who ran the market nearly the whole way higher, but we are still well off on the month.

Customers have now almost totally exited indices positions and the long bank holiday weekend coming up will probably encourage a certain amount of inertia today.

Currency markets seem to be very uncertain of the next direction, with the Euro (having bounced from the 122.00 again yesterday afternoon) now in the mid 123’s, but seemingly unable to make much progress above 124.00. For Euro bulls, the hope is that the charts might have built a double bottom versus the Dollar, but we will need rather more than the small bounce experienced so far to really put the idea strongly.

Sterling has also survived for another day, but like the Euro is struggling to breach resistance levels (in this case 1.4600). Both the spot Sterling and spot Euro are failing at suspiciously round numbers at the moment and we can speculate that if they are broken, there could be a sharp spike higher. For the time being though, clients seem happy to trade the ranges.

Oil continues to trade ever higher, now reaching 75 bucks, which is a far cry from the capitulation levels of earlier in the week. 75.00/75.50 is a small resistance area, but it must be admitted that the price of the black stuff seems much entwined with the equity markets. Since the last qtr of 2008, the general trends of both have been almost identical. If the equity markets can remain solid (a big IF I realise), then there is no particular reason for sharp moves in either direction.

Gold, almost unbelievably, went to sleep yesterday. With every other market seemingly rushing all over the place, Gold traded for pretty much the entire session within 5 or 6 bucks of 1212, with one attempt to break 1218 and one attempt to break 1205 (both resistance levels mentioned yesterday). Today sees the possible resumption of the slow grind higher, but trying to find buyers above 1215 is proving impossible just for the moment. Another somnolent session appears to be on the cards.