Daily Financial Analysis / Simon Denham / 01 April 2009 / Leave a comment

Daily Comment Wednesday 1st April

An extraordinary trip into work today with not a suit was in sight as just about everyone who works in the City (or at least those who haven't stayed at home) came in wearing just jeans and a shirt. The tube was eerily empty and walking to the office was stranger with a few shops and offices boarded up in preparation of today's demonstrations.

Even the FTSE is a taking a more casual approach to things this morning as we expect a dip on the open of 20 points to 3900. Nothing too drastic after yesterday's 4.3% rise. Despite a late sell off in US indices last night Europe is holding up well, especially since the end of the auto industry looks nigh. Even the new CEO of GM motors is putting a deadline on the firm either finding a resolution of filing for bankruptcy.

It is a very unfortunate fact, but as mentioned in yesterday's column it simply doesn't make economic sense to bailout our failing business after failing business. We could argue forever about the banking sector, but people don't need a new car every year, yet in the past 15 years or so new models have been made every year at huge cost and the stock has rarely been taken up.

The Gfk Consumer Confidence numbers yesterday helped sterling recover its losses on Monday and was a bit of a follow through from the better than expected mortgage numbers and yesterday's figures from M&S. The focus will be on the Halifax housing data due at 9h00 and then we have Nationwide's housing data tomorrow. Following the run to parity with the euro at the end of 2008, sterling has recorded its first quarterly gain since June and whilst many still believe parity is on the cards following a trend line break through 0.9000 earlier in March, failure at the 0.9500 level in EUR/GBP has given sterling bulls the upper hand for the time being unless 0.9500 is breached again. EUR/GBP is at 0.9215 this morning and cable at 1.4320, with 1.4360 remaining near term resistance and support seen at 1.4235.

The yen has recorded its biggest quarterly loss against the dollar since 2001, much to the relief of Japan's exporters. Japan's employment situation continues to worsen with unemployment hitting a three year high and last night's Tankan report revealing that manufacturing confidence took a severe knock, much worse than expected. Dollar Yen is at 98.95 this morning with the 100.00 level being a major psychological resistance level.

Gold continues to trade around the $920 mark and this morning we're at $919. There seems to be some reluctance in a move in either direction at the moment and maybe investors are nervously waiting in anticipation of something big to happen over the next couple of days and so in the absence of any big moves recently support remains around the 890 to 900 level and resistance at 950.

Today's inventories are expected to show a further rise, the highest since 1993 and over 10% more than average for this time of year and crude dipped yesterday in anticipation of further inventory build. This morning Brent is at $48.25 and for all the cuts in production that OPEC have made recently they're yet to see supplies fall sufficiently which means $60 a barrel is a bit of a pipe dream at the moment. 15h30 London time sees the data released to the market.