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The FTSE continues to give back last week’s gains. Although the morning’s services PMI data was called to come in weaker, traders did not hang around waiting for confirmation but started selling from the opening bell. Once again, European sentiment has been formed around the overnight events in Asia.
The Bank of Japan has once again hinted at further intervention as the Japanese yen continues to stray from the central bank’s script. The Caixin Services PMI data out of China came in stronger than expected, hitting six-month highs. Considering the increasing importance of the service sector to China’s economy, it is somewhat disappointing traders didn’t take more confidence from it.
Judging by the front page coverage David Cameron’s EU negotiations received, the pro-EU politicians have their work cut out to convince the press, let alone the voting public, that the United Kingdom should remain in the EU. Social media and polls have not always been the most accurate indicators for voter thinking, which partially goes to explain the strength of IG’s Brexit binary still indicating a 68% chance of the UK remaining in the EU.
Banks once again find themselves as the worst performing sector in the FTSE. The new kid on the block, Clydesdale Bank, has finally started trading, only 24 hours later than expected. Retail customers will be hoping this is not an omen of the service they can expect to receive. Having set its IPO price at the bottom of the range, the government will be one of many interested parties monitoring investment appetite for this bank as it hovers a couple of pence above its 180p IPO price.
ChemChina’s offer of $43 billion for Swiss firm Syngenta has triggered market expectation that the years M&A activity might finally be kick started by the chemicals sector. The mining sector, for so long a deadweight around the FTSE’s neck, has shown a little more value this morning with Anglo American, Antofagasta, Rio Tinto and Glencore all jockeying for positions in the list of best performing equities on the day. Ahead of the open, we expect the Dow Jones to start 87 points higher, at 16,240.