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UK stock market commentary (February 11, 2013): Big week for Barclays as more changes are made at the bank

Barclays is well and truly attempting to lead the way of change within the banking industry and the headlines are full of some of their plans ahead of their final results tomorrow. By closing down their tax avoidance arm they are clearly trying to change the bank’s image from what Bob Diamond was attempting to build it up to be - an impressive force in the investment banking world. But rather than making these sorts of headline grabbing changes the new CEO Anthony Jenkins is preparing the bank for a natural move away from many of the investment banking operations as well as trimming down some of its retail and commercial banking sections. Since the departure of Bob Diamond the investment banking section that he had built up was never going to be the same under new stewardship, but the landscape for investment banking as it once was is going through seismic change anyway. Not only are major cuts having to be made across the whole industry, not just Barclays, with divisions such as equities being amongst the worst hit, but the changing regulatory landscape is making things harder for them too. We are also unlikely to see the last of the scandals either and so no matter what changes are made there’s still likely to be consistent “bash a banker” rhetoric for a while to come.

On Friday the US trade deficit narrowed more than estimated in December as shown by a report and was accompanied by yet another set of positive corporate earnings surpassing the initial expectations. Together they continued to fuel the growing optimism that the world’s biggest economy is now on a path of sustainable recovery and as a result the Dow headed higher once again to reach its best level since 2007, although it couldn’t quite close above 14,000 instead choosing to end the week at 13,992, up some 50 points nonetheless.

This morning European indices are rather mixed with the FTSE just about creeping into the black having already been in the red straight from the off. The index is at 6270 at the time of writing and clients remain largely on the bearish side of things expecting further weakness to come.

Despite the early signs of a potential agreement on the next EU budget, the shared currency continued its slump against the greenback on Friday, losing 33 pips to 1.3365. This followed the alarm bells sounded by the European Central Bank President Mario Draghi that a strong euro currency could slow the economic recovery. No wonder the media is again talking about currency wars. This morning the single currency is neither here nor there, trading roughly flat around 1.3375.

Gold closed $2.7 bucks down to $1668.3 on Friday and this morning it edged up slightly despite a volatile euro. At the moment the sentiment is that there are few influences on the precious metal's price apart from currencies and the price of oil. A stronger US dollar makes gold more expensive for holders of other currencies, while rising oil prices make gold more attractive as a hedge against inflation and so it continues to trade within a tight range.

Record oil exports in the US not only helped bring down the trade deficit but now there’s talk about energy independence. The WTI crude prices lost 12 cents to $95.76 a barrel last Friday pressured by a rebounding dollar, discarding heightened expectations the US is in the process of getting out of woods which should support energy demand.