European Indices rise and US consumer confidence beats expectations

<p>The FTSE 100, DAX and CAC all rose around 0.5% on Tuesday is somewhat reduced trading volumes as company earnings, better than expected macroeconomic data and positive sentiment all continued to […]</p>

The FTSE 100, DAX and CAC all rose around 0.5% on Tuesday is somewhat reduced trading volumes as company earnings, better than expected macroeconomic data and positive sentiment all continued to support equity markets.

Trading volumes are below average however and this is likely to exacerbate moves and make markets slightly more volatile. Today the lower volumes is helping to maintain Index strength though with a few key pieces of information due out over the next two sessions including the FOMC decision and earnings from Barclays and Astrazeneca, traders may do well to exercise a degree of caution. Indeed we have seen elements of this impacting the level of volumes traded today.

Forecast beating earnings from both UBS and Ford have continued the positive theme emanating out of company earnings recently to support equity markets. The numbers concerning UBS are particularly pleasing for investors considering that the bank saw the highest amount of net inflows of capital since 2007. This gives shareholders confidence that clients are returning to the investment management operations with vigour having been somewhat scared away over the last few years.

All eyes of investors will be on Ben Bernanke and the Federal Reserve over the next 24 hours however as the FOMC determines rates and traders eye clues towards the Fed’s exit strategy from their second round of quantitative easing. The $600bn scale of asset purchases is set to be completed in June and investors will use the questions and answer session tomorrow night to gauge Bernanke’s exit strategy from this and of any shift towards a more hawkish policy stance.

US consumer confidence rises more than expected
US consumer confidence rose more than the market expected last month, reaching 65.4 with most analysts expecting the gauge to rise to 64.5.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.