A glance at the FTSE 100 chart shows an index that seems to be running out of steam in its drive higher, and this is causing sentiment to become increasingly fragile. However, although May has seen little in terms of concrete gains there is no sign of a selloff materialising just yet, with buyers coming in around the 6770 level.
Macro data continues to improve, underlined by the surge in UK retail sales this morning that put a rocket under sterling and sent it back towards $1.69 against the US dollar. The move in GBP/USD was given added strength by the Bank of England minutes, which shows the balance of opinion on the Monetary Policy Committee is shifting in favour of the hawks for the first time in years.
US futures are pushing nervously higher today, but the prospect of the Federal Reserve minutes suggests the day will see little action before the news hits wires this evening. The minutes will probably leave us none the wiser regarding the timetable for rate hikes, but the market cannot survive on warm words forever. At some point the Fed will have to alter guidance to a firmer timetable – that point hasn’t arrived yet, but it is not too far away.
Ahead of the open, we expect the Dow Jones to start 15 points higher at 16,389.