FTSE lagging behind other markets

The FTSE 100 has lost ten points in early trading, with the main focus being the debut of insurance firm Saga in London.

Elections dominate the headlines, as the market sits between yesterday’s European elections and the weekend’s presidential ballot in Ukraine. Neither is particularly market-moving, but with a long weekend looming in the UK traders seem content to use the votes as a reason to close out positions as the week comes to an end.

Morning trading has seen the FTSE lag behind other markets and looking to finish the week towards the lower end of its trading range, unlike the DAX and S&P 500.

Blackrock seems determined to reignite the apparently moribund AstraZeneca/Pfizer deal, adopting the curious position of supporting the Astra board but still keen on the resumption of talks. 

Saga’s float has been completed at 185p, and the shares are tiptoeing higher, but the decision of the company to float as a travel and leisure rather than insurance firm has dented enthusiasm among City investors. Retail investors remain keen however, and the likelihood is that we will see the shares move gradually higher as big institutions get over their initial disillusionment and start buying in earnest.

US markets finished close to recent highs last night, but the quiet trading in futures suggests that 1900 will still be a step to far for the S&P 500 today. The small caps drove risk appetite last night, marking a change from recent weeks when this part of the market had lost ground even as the big names have pushed upwards. Although the Russell 2000 is no longer in contraction territory, it needs to deliver this outperformance versus the large-caps on a more regular basis if investors are to feel more confident about the rally.

US home sales this afternoon are expected to rise for the month of April, but overall it is likely to be a quiet wind down into the weekend. Ahead of the open, we expect the Dow Jones to start 16 points higher at 16,559.

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