We wish a happy birthday to the FTSE 100, which is 30 years old today. A little piece of birthday cake could go a long way to help lift the mood after yesterday’s gloomy start to 2014. Could this be the year we break the 7000 level?
The City still has a rather lethargic feel at the moment, and volumes continue to be somewhat on the low side. This morning’s economic data releases have been a little underwhelming, as money finding its way down to individuals is still moving at a slower pace than expected. The combination of the monthly Nationwide house price index rising by 1.4% and the very healthy levels of construction PMI will do nothing to dampen down fears of a housing bubble.
As always, retail stocks are the first to publish figures at the beginning of the year, with initial reports of their festive sales. After rounding off 2013 with a 47% rise in its share price, Next has wasted no time in ensuring that 2014 has every chance of replicating that performance. The announcement that fourth-quarter sales are significantly ahead of expectations has enabled the retailer to raise its full-year profit expectations by £27 million, or just over 4%. Meanwhile, House of Fraser continues its long-standing on/off dance with the markets, as news emerges that it could once again be quoted by the end of the year. The way that investors have flocked to stocks that have successfully tapped into consumer demand and rewarded the share price has no doubt helped entice those in charge of the company.
Today offers the first chance for the markets to gauge the Federal Reserve’s mood in 2014. A plethora of FOMC members are speaking at different events tonight, including both Charles Plosser and Jeremy C Stein along with Fed chairman Ben Bernanke. European nervousness on the first trading day of the year looks to have transferred itself across the Atlantic, as US markets gave up a chunk of their December gains yesterday. But with trading floors on Wall Street far from full, it is a touch premature to judge the market's mood for 2014 just yet. Ahead of the open, we expect the Dow Jones to start 15 points higher at 16,556.