Barclays leads FTSE higher

In the wake of a strong finish in the US last night, the FTSE 100 has started the day well, rising 30 points with Barclays leading the way.

We seem to be stuck in a loop this week, either discussing banks or talking about supermarkets. This morning we got both, with Barclays and Morrisons both on the agenda.

The City’s cold-hearted approach to the world was highlighted by the 5% rise in Barclays, as Anthony Jenkins announced a fresh round of job losses in investment banking and the complete withdrawal from the European retail banking scene. Although they have announced a new ‘bad bank’, I fear it is a case of ‘too little, too late’ for Barclays, given that there are likely to be ongoing problems with toxic loans. The example of Bank of Ireland is instructive – a bounce in the share price, followed by continued declines as reality sets in.

Morrisons continues to serve up cold hard gruel to its shareholders, as the supermarket unveiled yet another drop in sales. Shareholders must be hoping that the firm has deliberately front-loaded all the bad news, but executing such a major turnaround in the full glare of analyst scrutiny is going to be a far harder task than many realise. Ocado is down 1.5% in sympathy with Morrisons, and has now lost around half the gains made in its 2013 rally.

Janet Yellen has survived day one of her congressional testimony, having remained tight-lipped on the timetable for interest rate rises. Evidently the experience from March’s Federal Reserve meeting has been instructive, since Ms Yellen refused to give way even when repeatedly questioned on the point. In situations like these, markets are too keen to focus on the minutiae of what she says rather than the broad points, and the reality is that the Fed is determined to avoid imperilling the US recovery with a premature rate hike.

Hyper-growth stock Tesla slumped last night after earnings, as the company pays the price for the astronomically high expectations that have been baked into the share price. 

Ahead of the open, we expect the Dow Jones to start 16 points higher at 16,534. 

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material 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 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. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Find articles by analysts

Een artikel zoeken

Form has failed to submit. Please contact IG directly.

  • Ik wens per e-mail informatie van IG Group bedrijven te ontvangen over handelsideeën en IG's producten en diensten.

Voor meer informatie over hoe wij uw gegevens mogelijk kunnen gebruiken, bekijkt u ons Privacy- en toegangsbeleid en onze privacy website.