Stock market lurched into bear territory

As we wait for the BOE interest rate decision tomorrow which is expected to be rates held at 5%, the stock market lurched into official bear market territory yesterday by trading 20% below its June 2007 peak of 6,732 but closed temporarily out of the danger zone at 5,440.5.

Oil had its largest one day drop since March of $5 which gave the US $ a boost against the Euro which found support at the 1.5630 level and traded a daily range of 1.5635 / 1.5740. Federal reserve chief Ben Bernanke announced last night that he is considering extending its emergency cash lending system for investment banks which gave further support to the $US overnight. Against GBP it continued to strengthen slightly with UK recessionary data released over the last week and the CML announced yesterday mortgage completions are near record lows and commercial property values are falling across the country. 

Sterling traded yesterday at a low of 1.9666 and a high of 1.9797, but may strengthen today with the May trade figures expected to improve a touch to £7.4bnfrom £7.6bn the previous month. 

The Australian dollar continued to be under pressure as oil lead commodities down for the second day, a weaker Australian Dollar has prevented further losses on the cross-rate and opens this morning around 2.0600 against sterling.