Established in 1974
185,800 clients worldwide
Over 15,000 markets

Markets slightly lower but positive sentiment remains

In mid-morning trading the FTSE 100 is down 25 points, pushed lower by concerns from the consumer sector.

Frankfurt
Source: Bloomberg

The magnitude of yesterday’s rally will have caught many by surprise, and while markets are moving a touch lower this morning it seems like the bulls are still firmly in control. The 10% correction was a nasty shock, but with the end of the year looming there will be a lot of investors looking to jump on board a late-stage rally that will do much to buff performance figures for the year.

British American Tobacco’s disappointing numbers today have sent the shares to their lowest level since April, although the strong pound’s impact will diminish in the next update given that sterling is continuing to fall.

Speaking of sterling, the currency was given another shove in the direction of $1.60 as minutes from the Bank of England pointed towards a delay in interest rate hikes. This backs up the public statements made last week at the height of the market’s volatile period, but it illustrates how the attempt at clear forward guidance simply leaves the bank at the mercy of events.

Yahoo picked up the baton from Apple last night, keeping markets in positive mood thanks to good earnings numbers, but the big event is likely to be the CPI reading. Downward pressure on the number is likely to come from the broad selloff in oil prices, which gives the Federal Reserve additional wiggle room on monetary policy, even if QE is still set to leave us next week.

More important is the outlook on rates and in this the Federal Open Market Committee is likely to emulate the BoE in due course, signalling that renewed global headwinds will be the key worry regarding the outlook for the US economy.

Ahead of the open, we expect the Dow Jones to start 30 points lower at 16,586.

The information 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 Bank S.A. 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 and as such is considered to be a marketing communication.