Bernanke testimony boosts stocks

CMC Markets

Europe European markets have had a broadly positive session helped in no small part by the released testimony from Fed Chairman Ben Bernanke that "QE is not on a preset course" which has helped stock markets push towards their highest levels of the day. The FTSE100 continues to struggle near the 6,600 level but has been broadly boosted by a series of positive trading statements from the mining sector and some positive broker updates. Mining stocks have been the best performers today helped in no small part by some positive trading statements from BHP Billiton and Fresnillo, following on from Rio Tinto's well received update yesterday. Record copper production has helped BHP push higher while a good quarter in silver has helped push Fresnillo higher. On the downside Smiths Group was lower after the company warned that its latest profits would probably miss expectations after some unhappy customers chose to withhold payment for problems with equipment from its detection division. Real estate investment trust Land Securities is also lower despite a fairly upbeat set of numbers and a positive outlook for the London market. Imperial Tobacco is the worst performer after going ex-dividend. US US markets opened higher today despite some pretty awful housing and building permits data for June which was outweighed by the market reaction to Fed Chairman Ben Bernanke's written testimony which was released at the same time as the economic data. His comments that "QE is not on a preset course" appear to have assuaged some concerns about higher rates. Housing starts for June slid 9.9%, and were expected to rise by 5% and building permits also slid by 7.5% and these were also expected to show a positive number. These poor numbers would appear to suggest that any prospect of tapering asset purchases could well be pushed back, and thus be broadly supportive of equity markets. In earnings news Bank of America carried on the positive theme in the banking sector reporting profits of $0.32c a share, above expectations of $0.25c a share. Revenues came more or less in line with expectations. FX The pound has been the best performer today after the latest Bank of England minutes showed that both Fisher and Miles reversed their calls for an extra £25bn of QE, while unemployment data also showed some improvement adding up to a double dose of good news. Before sterling bulls break out the bunting this shift in tone could be a simple prelude to other more innovative measures to push rates lower, and the pound in the coming months. The Japanese yen had originally been the worst performer today despite the Bank of Japan leaving monetary policy unchanged, and updating its economic outlook. These losses were reversed by the dovish tone from Bernanke's written testimony which helped push the US dollar lower and pull the yen off its worst levels of the day. Commodities Gold continues to struggle just below the $1,300 level despite a reiteration of last week's dovish remarks from Fed Chairman Ben Bernanke, which pushed it to its highest levels for three weeks. Copper prices have been on the slide again, probably as a result of the prospect of oversupply in light of record production figures from Rio Tinto yesterday and BHP Billiton today. With inventories already at fairly high levels and production levels high as well, the risk has to be in the event of continued subdued demand that prices are likely to come under downward pressure. Crude oil prices continue to remain underpinned after weekly inventories showed a bigger draw than estimated coming in at -6.9m barrels well outside estimates of a draw of 2m barrels. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person