DAX higher as greenback woes maintain risk appetite – FTSE lags on banks

<p>  European Indices continued to trade to the upside with the DAX Index posting gains of over 0.5% in early trading as investors continued to hunt risky […]</p>

 

European Indices continued to trade to the upside with the DAX Index posting gains of over 0.5% in early trading as investors continued to hunt risky asset classes. The FTSE 100 did however lag behind European Indices, falling 16 points on weakness in the share prices of major UK banks such as Barclays, Lloyds and RBS.

Interestingly it is the banks that have actually weighed on the FTSE 100 Index for much of the last 4 weeks on continued uncertainty over stricter regulations and yesterdays healthy earnings from JP Morgan seems to have not been enough to encourage higher demand for banking shares.

The banking sector in London has fallen 5.5% in the last month whilst in the same time frame the mining sector has rallied 15% helping the FTSE 100 to charge 5% higher. This emphasises just how much of an effect the dollar woes are impacting commodities and helping to push higher global Indices of which mining companies have a large weighting. It is the currency wars and QE2 that are driving European Indices higher. Intel and JP Morgan have helped to cement these gains by reporting strong earnings this week and should other key firms tow and similar line, traders could quickly start to target 6000 on the FTSE again.

The currency wars and subsequent dollar woes continued in full throw today after Singapore widened the Singapore Dollar’s trading bands and maintained a policy of gradual appreciation which has caused further selling out of the US dollar, and this has meant that appetite for risky asset classes and demand for commodities continues.

Vodafone shares received a boost today after Nomura upgraded their rating on its shares to a buy, from a neutral stance, citing strong cost reduction and the positive momentum that continues with the telecom giants’ joint venture with Verizon Wireless.

On the downside, African Barrick Gold shares were hit hard today, falling 8%, after the gold miner cut its 2010 production target yet again. It’s the second time in the last three months that they have done so and this is inevitably raising concerns about the medium term prospects for production at its Buzwagi mine after it suspended 40% of its staff there.

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