Having traded within a whisker of their October lows, US markets are
helping to push markets over the break even mark for the day. The
notable exception is the FTSE which is being dragged down by continuing
weakness in the financial and energy sector. Crude has made a minor
recovery today, but this comes after 22 month low was made yesterday in
late US trading. Consequently, BP and Shell are still down heavily on
day as a hangover from overnight sentiment. Financials are amongst the
worst performing companies today as Libor broke its 23 day decline. 3
month Libor increased to 2.15% and overnight Libor also pushed higher.
The main catalyst has been Paulson's announcements of changes to the
Troubled Asset Relief Program. As this originally was seen as getting to
the heart of the matter in terms of offloading toxic assets, investors
are confused as to what this means for the future prospects for
financial firms in the US. More than anything market participants hate
confusion or indecision, with the common reaction being "if in doubt,
get out". This is reflected in the performance of financial shares
across the globe today. As the wider market attempts a rally, financials
are weighing on sentiment like a ship trying to sail with its anchor
still deployed.
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