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The FTSE 100 has started the week on a mildly negative footing, following the sentiment in Asian markets. As the index continues to bob along just above the 50- and 100-day moving averages, the bulls continue to be nervous with the 'buy on dip' traders apparently still be sunning themselves on the beach.
Over the weekend, the Confederation of British Industry (CBI) has raised its targets for UK growth, up to 1.2% for this year and 2.3% for 2014. This does add to the growing feeling of confidence regarding the UK economy; though an increase in corporate spending in both research and development would add some considerable weight to this movement.
Bovis Homes has tried its best to set the tone for the FTSE Mid 250, posting excellent figures with first-half profit up by 50% after benefiting form the government’s first-time buyer housing schemes. Homebuyers have responded well and Bovis have sold 90% of its full-year target in the first six months alone.
The oil, gas and mining sectors continue to lead the FTSE on a merry dance and by mid-morning the top five fallers were all from this sector. Gold mining companies particularly don’t know whether they are coming or going, but ultimately they are benefiting from an improved spot gold price that is desperately trying to break the negative trend of the last year.
As global economic regions have recorded increasingly better data, the looming end of the US quantitative easing process has grown larger in equity markets' rear-view mirror. This week's US Federal Reserve minutes, along with comments from the Jackson Hole meeting, could confirm the US’s ability to start tapering this year rather than next. We look set for US equity markets to remain shaky as these pieces of the jigsaw fall into place.
After a quiet start, EU and UK GDP data, along with Fed minutes and the start of the Jackson Hole meeting all in the second half of the week, excitement will build closer to the weekend. Ahead of the open, we expect the Dow Jones to start 17 points lower at 15,064.