FTSE stability provides optimism

European indices seem to have found some sense of stability this week, following on from a shocking week.

Source: Bloomberg

Asian markets have also paused for breath, with only the Japanese suffering heavily, as its plays catch-up after a national holiday yesterday.

There is a feeling that perhaps the selling pressure that has characterised stock markets last week may ease somewhat, as profit-taking among shorts and bargain hunting takes hold.

However, with earnings season now underway, the selloff seen in 2016 so far could provide great buying opportunities for those expecting to see positive updates.

UK manufacturing continues to suffer, as the manufacturing production figure for November seemingly confirmed the weakness that last week’s PMI reading alluded to, with a second consecutive month-on-month reading of -0.4%.

With industrial production suffering alongside manufacturing in November, it is clear that the notion of a rebalancing within the UK economy is far from realistic for the time being.

Morrisons provided the first of the supermarket trading updates, with the Bradford-based firm announcing its first sales growth in four years.

Market sentiment surrounding the dominant supermarket firms has been waning with the continued ascent of German discount firms Lidl and Aldi, alongside worries over the potential entry of Amazon into the sector. However, today’s news proves there may be hope yet for the traditional UK firms who hope to claw back ground despite the one-way battle that has been waging over recent years.

Ahead of the open we expect the Dow Jones to start six points lower, at 16,392.

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.