Mike McCudden, Head of Derivatives at Interactive Investor ( www.iii.co.uk), gives his thoughts on the last week of trading and looks ahead to what we can expect next week.
"UK volumes this week have been fairly typical for the time of year with no great surprises to boost numbers. Interactive markets traders, the majority of whom trade the FTSE 100 Index price, saw some opportunity mid-week at the lower end of the range of 5860 to 6110. As of Friday afternoon the FTSE is back up around the 6000 mark, driven by mining and energy as weak data from the States pushes the Dollar lower.
"A weaker Dollar combined with high inflation, driven by the perceived demand for commodities not going away any time soon, means UK interest rates look likely to remain low. Sterling is limping along at around 1.6230 against the Dollar, having tested resistance at 1.6283. The data saw EUR/USD enjoy a brief rally and is trading back around 1.4220, but closer to home interactive markets traders are looking to the IMF report on Greece, and more clarity on a solution to the problems there.
"Germany and France are steaming ahead with strong manufacturing thanks to the likes of Greece dragging the Euro lower and driving exports. It will be interesting to see how that story unfolds in the weeks and months ahead. German and French manufacturing and service numbers are released next week and investors are happy at the moment to clear the decks ahead of the weekend and wait for those.
"In the US it looks like investors are getting over excited by dot coms again as LinkedIn, which turned a profit of $3.4 million in 2010, has a whopping $8.91 billion value on it as it reached a high of $122 on its first day of trading. Zynga, Facebook, Groupon, Twitter and others will all be salivating on the sidelines. Whether or not it's another bubble we will have to wait and see, but one certainty is that LinkedIn's management has its work cut out delivering on that valuation."
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