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Markets react positively to improving data - Latest Market Analysis

European markets opened broadly higher this morning, despite news from Germany showing that business sentiment fell in August. The German Information and Foschung (Ifo) Business Climate Index, compiled form a survey of 7,000 businesses, fell to108.7 against forecasts of 111.0, adding to negative data from yesterday.

The FTSE opened lower, gaining ground through the morning although continued dips back into negative territory emphasised that the recent gains were on low trading volumes.

Sentiment was boosted somewhat in the early afternoon as US durable goods orders increased 4% in July, against expectations of 2%. The sales of long lasting manufactured goods, e.g. vehicles and electrical goods, was welcome given the raft of poor data that has recently led to suggestions that the US is dipping back into recession. Futures prices for major US indices came off their lows on the news, suggesting a flat open as opposed to the one percent loss previously indicated. Europe was also buoyed by the news, the FTSE putting on around 1%.

The FTSE was led higher by financials, Man Group posting a 10.2% gain on the day to close at 216.1p. The hedge fund manager was buoyed by an upgrade from HSBC which increased its target price from 220p to 260p. The positive outlook was based on stellar performances from its funds in June, increasing the likelihood of the group receiving additional performance fees. Banking stocks were also lifted, with the previously down trodden RBS, Lloyds and Barclays putting on 9.4%, 6.4% and 2.9% respectively.

Admiral was the biggest faller of the day, the motor insurer experiencing an almost 12% loss in response to its 1H results which appeared impressive on a revenue basis. Analysts however highlighted a flat underwriting profit in car insurance, despite the 58% top line growth, as concerning.

The DAX finished the day up 2.7%, the CAC 40 1.8%, meaning the FTSE 100 was a relative underperformer with its 76 point gain, finishing up 1.5% at 5206. Gold was one of the major stories of the day, seeing a dramatic fall and at one point reaching the $1770 level. At the time of writing, the metal was pricing around $1780 per troy ounce, some way from the all time high above $1900 that was reached only yesterday.

This was posted in Bdaily's Members' News section by John Dance .