FTSE 100: Challenged but managed to hold onto support at 5,000 yesterday. Next resistance to overcome is at 5,200.

Trading activity was choppier then it seemed yesterday with the Dow Jones at one time up 150 points but then rapidly moved into negative territory to eventual close with reasonable gains. This provides another classic sign that investors are still considering whether too much good news has already been discounted, particularly in equity markets. But yesterday sentiment was given the additional boost of universal positive economic data.

Today should see the clarification of changes coming through in the UK banking system. Demanded by the European Commission to safeguard competition RBS and Lloyds are expected to announce plans to set up new banks from their existing branches and sell them off. According to the latest news from the BBC, RBS is expected to sell branches in England and Wales and its Churchill and Direct Line insurance business. Lloyds is expected to sell its Cheltenham & Gloucester branches and its Intelligent Finance online business. In addition, Lloyds is expected to announce its will raise £20bn. The news yesterday was not taken well by shareholders with RBS and Lloyds shares down 7.8% and 2.3% respectively.

The news from the banking sector is likely to dominant activity today as economic data remains thin on the ground with US factory orders and auto sales due for release. In Europe we just have Spanish data in the form of unemployment and consumer confidence.

Sources: Reuters: BBC: Bloomberg: Lawshare: Deutsche Bank (db): Proquote: Financial Times: Wall Street Journal: CLSA: Sharescope: Market News. Capital Economics: CNBC: Wikipedia:

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