Equity markets got a couple of shots in the arm yesterday as bullish news from a couple of corporate heavyweights tempered poor investor sentiment. GE, the world’s 3rd largest company, announced yesterday that it would be keeping its dividend but also warned that its Q4 profits would be at the low end of expectations. A deal between the US automakers and Congress is also closer to being a reality as Speaker of the House Nancy Pelosi stated that bankruptcy was ‘not an option’. Oil companies took a bit of a beating however as the price of oil fell to a 42 month low.

Sterling had a fairly good day yesterday in so much that it managed to halt the velocity of Monday’s declines but our look is still bearish over the next month or two. We lost ground against the euro as the market began to price in the full 1% rate cut by the MPC that we expect on Thursday, a position we have held for a month now. The Australian central bank cut rates last night by a full 1% as it looks like the country is headed for its first recession in 17 years; the AUD has given up some ground against the dollar and euro but such as is the bad feeling towards sterling we have been left out of any appreciation.

News today has already been a mixed bag for sterling; Nationwide Consumer Confidence fell to its lowest since records began on the back of unemployment and curtailed credit while plans to be laid out in the State Opening of Parliament by Her Majesty for banks to abide a new code of conduct may see some positive inflows. Other pieces of data today include PMI from the UK services sector, European retail sales and ADP employment change, the important precursor to Friday’s Nonfarm Payrolls number.

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