Financial market research and analysis

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FTSE slips, gold miners gain
Asian stocks closed the week on a negative note. Oil and commodities traded softer, gold extended gains to $1280 despite a better bid on US dollar across the board. Randgold (+0.08%) and Fresnillo (+0.17%) are among the rare gainers in London thanks to firmer gold prices.

The FTSE slipped below the 6200 mark at the open in London. All sectors opened in the red. Technology and financials lead early losses.

Copper futures firmed in London, though the prices are set to close the week with the largest weekly loss in a month. Gains in Rio Tinto (+0.20%) and Anglo American (+0.48%) could therefore be fragile before the weekly closing bell.

In the FX markets, the US dollar firmed across the board. The Japanese yen has been the unique currency to appreciate against the US dollar in Asia. Despite the dovish Bank of Japan speculations, the yen fails to gather enough momentum on the short side. The USDJPY hit 106.25 yesterday. The key support is eyed at 105.56, May 3rd low.

Eurozone: rush into corporate debt

In the Eurozone, investors step out of the equity markets to invest in corporate bond debt at a visible pace. The rush into Eurozone corporate bonds will likely cause a similar unhealthy distortion in risk-to-return ratios as it has been the case when the European Central Bank started buying sovereign debt to boost growth.

The real danger is that the small and medium sized companies could be left out of the game. Such polarisation in the financial environment could fail to improve the macro picture and further damage entrepreneurship within the Eurozone.

ECB corporate bond purchases have pulled investment level bond yields below 1% in two trading sessions. We could expect an increase in the investment level bond market volatility over the next couple of weeks. In the mid-run, we are afraid that ECB policies would step on investors’ feet and generate further turmoil in the financial markets.