This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.
Mineral extractors weigh on FTSE
British banks were shaken by President Obama’s message to Vladimir Putin that tougher sanctions could be imposed on Russia. Even though UK banks have less exposure to Russian assets than eurozone banks, they are feeling the pinch as a war of words could lead to frozen assets.
Mineral extractors are weighing on the FTSE 100 as the liquidity boost that was expected by the Chinese central bank never materialised. China is already too dependent on credit; is reducing the reserve requirement ratio a good idea in the long run?
We have seen a number of sellers on our grey market for Alibaba. The Chinese ecommerce giant is set to float and IG clients are now indicating it will have a market capitalisation of $230 billion.
Online food takeaway company Just Eat is set to go public and IG clients are indicating the company will have a market value of £1.3 billion. This compares with the £700-£900 million range the firm hopes to raise from the flotation.
Dow traders affected by standoff
In the US the Dow Jones is up two points at 16,270, as the standoff between President Obama and Vladimir Putin has forced some traders to the sidelines. The west must be seen to take a hard line with Russia in case Moscow starts to claw back other regions of the former Soviet Union. In reality the sanctions that have already been imposed on Vladimir Putin’s inner circle have had little or no impact. Relations between Moscow and Washington have yet to thaw, and the lack of progress will cap any gains that can be made in equities. Confidence will not be fully restored until there is a political solution.
Gold could lose more ground
Gold is currently trading below its 200-day moving average; from a technical point of view this is very bearish, and if it doesn’t move above the technical indicator it could lose further ground.
Retail sales boost sterling
Strong retail sales from the UK have sent sterling higher versus the US dollar, and the jump in retail sales has yet to trickle down to the national inflation level which declined earlier this week.