European Indices rise and US consumer confidence beats expectations

The FTSE 100, DAX and CAC all rose around 0.5% on Tuesday is somewhat reduced trading volumes as company earnings, better than expected macroeconomic data and positive sentiment all continued to support equity markets.

Trading volumes are below average however and this is likely to exacerbate moves and make markets slightly more volatile. Today the lower volumes is helping to maintain Index strength though with a few key pieces of information due out over the next two sessions including the FOMC decision and earnings from Barclays and Astrazeneca, traders may do well to exercise a degree of caution. Indeed we have seen elements of this impacting the level of volumes traded today.

Forecast beating earnings from both UBS and Ford have continued the positive theme emanating out of company earnings recently to support equity markets. The numbers concerning UBS are particularly pleasing for investors considering that the bank saw the highest amount of net inflows of capital since 2007. This gives shareholders confidence that clients are returning to the investment management operations with vigour having been somewhat scared away over the last few years.

All eyes of investors will be on Ben Bernanke and the Federal Reserve over the next 24 hours however as the FOMC determines rates and traders eye clues towards the Fed’s exit strategy from their second round of quantitative easing. The $600bn scale of asset purchases is set to be completed in June and investors will use the questions and answer session tomorrow night to gauge Bernanke’s exit strategy from this and of any shift towards a more hawkish policy stance.

US consumer confidence rises more than expected
US consumer confidence rose more than the market expected last month, reaching 65.4 with most analysts expecting the gauge to rise to 64.5.

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