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Bullish banks have lead the charge today as the relief rally continues. The day’s enthusiasm is primarily on the back of yesterday’s strong surge from US markets. The pressure has been on the UK banking sector, but they were pushed down too hard too fast. In the short term at least it looks as though investors are confident that banks have been beaten down well below fair value and are stepping in to pick up some bargains. Better than expected earnings from JP Morgan, Coca Cola and United Technologies helped fuel today’s rally further when the numbers came in around Midday. Stronger than expected housing starts and weekly jobless claims have also added to the positive news flow.

Markets are off their highs but are still registering solid gains as traders await the numbers from some Wall Street heavy weights after the US close. This evening we have Merrill Lynch, Google, Microsoft and IBM all announcing their latest earnings figures. If they come in better than expected, stocks could see some serious buying post market and at the open tomorrow morning.

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The FTSE is currently indicating a stronger opening, with HSBC leading the way. The HSBC stock is higher in Asian trade, after worries about the US financial system eased. Today with no economic data being released in UK, the focus will shift across the ocean, and focus on the housing start and weekly employment data from US.

Gold suffered a bout of profit taking yesterday, as traders booked profits after gold gained more then 50 dollars over the last week. Gold will resume its uptrend, as a weak dollar will be forcing traders to hedge by buying precious metals. Oil was hurt yesterday after the DOE released its inventory numbers, however with the US dollar on the defensive this morning, we expect the contract price to creep towards 140 by the end of the week.

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