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BetOnMarkets Afternoon Update
The large earnings miss from Lloyds TSB is getting most of the headlines today, but for all the “this is another Northern Rock!” warnings, Lloyds share price is still above the £2.70 low registered earlier in the month. RBS and Barclays are actually enjoying gains of around 4% today as investors cycle back into financials. There has been a lot of uncertainty over bank’s earnings from the likes of Merrill Lynch in the US to Lloyds TSB in the UK. Traders tend to hate uncertainty more than they hate bad news, and although the news from Merrill or Lloyds has been dire, at least market participants can now price in the bad news and start to be able to compute downside risk. This is much more preferable than the unknown and stocks often rise as a consequence.

The release of the news helps to foster the belief that the worst of the credit crunch is behind us, at least from the point of view of being able to estimate future earnings more accurately. The logic behind this can of course be questioned, but it is evident that investors are getting more confident in their bullish positions.

The better than expected US ADP employment report helped boost US markets earlier today as has the continued weakening the price of oil. It is debateable whether we have bottomed or not, but for now the bulls seem in control …… At least until the next big news item.

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The FTSE is currently indicating a sharply higher opening, as traders are trying to get their positions in before the release of the UK consumer confidence numbers which are released at 11pm GMT tonight. There are rumours circulating that the number will be higher then expected. Traders are proving that the old saying buy on rumours sell on the news works. Look for the FTSE to stay in the green the whole day.

Gold and oil keep taking it on the chin as both were losers yesterday, oil is on the verge of heading below 120, technicals are indicating that a break of that level opens a move to 110. This could be helped with the employment data from the US which is due on Friday of this week. Gold is giving back all the gains made last week, as the US dollar strengthens against the major currencies especially the commodity pairs (Australian and Canadian dollar). Both have lost ground as gold fell from its 975$ peak. Look for the strength of the US dollar to continue unless economic data shows otherwise

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