A softer start for the FTSE

A soft Asian session has laid the template for a European equity sell-off.

London Stock Exchange sign
Source: Bloomberg

In contrast to Monday, traders have found it more difficult to maintain optimism as corporate data releases disappoint and underwhelm.

The writing had been on the wall for some time but today BHP Billiton announced its first interim loss in 16 years forcing the firm to slash its dividend by 75%. Considering a number of its direct competitors had already been forced into taking this action, and the costs of the Brazilian disaster along with write downs for North American fracking operations, this news will not have caught many by surprise.

HSBC’s figures yesterday set a worrying president for Standard Chartered but even the bears will have been taken by surprise with how far it missed its full-year expectations by. Year-on-year pre-tax profits collapsed from $5.2 billion down to just $800 million.

Oil prices remain volatile with both WTI and Brent crude giving back much of the gains they saw during yesterday’s session. Although oil prices have made an effort to show some resilience since production talks were held last week, the unavoidable truth remains that production is still at record high levels and no nation has actually agreed to cut production.

The lows in GBP/USD yesterday were $1.4057 and sterling has bounced slightly, clawing back a mere 80 pips in today’s morning session. The political rhetoric is only likely to escalate now we have seen the start of the Brexit campaign. The increased uncertainty will add to the pressure on sterling.

Gold continues to hold above the physiological $1200 level and, unlike months gone by, the precious metal looks to be showing a little more resilience and the bears appear a little less eager to pile on the selling pressure.

 FTSE risers and fallers (as of 9.30am)

Company % change Index points
HSBC Holdings +1.56 +5.29
Lloyds Banking Group +0.95 +1.49
Rolls-Royce Holdings +2.28 +1.07
Persimmon +4.56 +1.07
InterContinental Hotels Group +3.67 +0.83

 

Company % change Index points
BP -1.32 -3.35
British American Tobacco -1.10 -3.09
GlaxoSmithKline -0.90 -2.37
BHP Billiton -3.35 -2.19
Standard Chartered -3.67 -0.83

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