Financials give FTSE a boost

Equity markets have shrugged off yesterday’s collapse and have come back with renewed vigor.

Lloyds Bank sign
Source: Bloomberg

Of late, we have had few occasions to be thankful for the contribution the financial sector has made to the FTSE, but today is an exception to the rule. Lloyds might well have set aside another £2.1 billion for historic mis-selling – however that is not what the City has focused on.

A special 0.5p dividend is exactly the sort of announcement that gets investors excited for an income stream. No doubt today’s 10% jump in the share price will re-ignite the debate over when the government will be able to sell off its final stake in the bank.

Stephen Hester has overseen outstanding improvements at RSA Insurance and with operating profits up 43% year-on-year, he continues to improve his and the insurance firm’s reputations.

European equities are once more absorbing weaker inflation figures but may find this buoyant stance a little harder to hang onto.

Oil is again feeling the selling pressure, however stubbornly refusing to fall below $30. Statements of intent from leading oil producing nations appear to be coming on an almost daily basis, leaving oil traders wondering who will claim they want to see prices higher while doing nothing to make it happen.

Yesterday saw gold jump above $1250 sending a flurry of excitement around the gold bug community. The overnight session has seen some of this move given back but importantly still enabling the precious metal to hold above $1232.

GBP/USD is once again below $1.4000 and FX traders will be asking if the aggressive moves we have seen since the weekend’s Brexit news hit the markets has exhausted itself or if there is more panic still to be factored in. A pause for breath before heading lower and lower highs are seen might be in order, but the uncertainty over sterling still remains a concern.

The Day Ahead

Economic data:

1.30pm – US durable goods (January), initial jobless claims: orders are forecast to be up 2.7% MoM overall, from a 5% decline in December while, excluding transport, are forecast to rise 0.4% from the 1.2% fall at the end of 2015. Claims expected to be 269K from 262K.

11.30pm – Japan inflation (January): prices expected to rise 0.1% YoY and 0.1% MoM overall, while core prices increase by 0.12%.

FTSE ex-dividend stocks 25 February:

FTSE 100: easyJetDiageoRio Tinto

FTSE 250: BeazleyHICL Infrastructure Co Ltd

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