Corporate disappointment sends FTSE lower

Pre-budget jitters and disappointing corporate releases combine to send the FTSE lower as European confidence ebbs away.

City of London
Source: Bloomberg

After a bright start to the week, equity markets already look to have given up the fight as trading screens are bathed in red. It appears fear rather than hope is the overriding feeling traders have as they look further into the week. Expectations are low for the Chancellor’s budget, as the looming issue of the Brexit referendum will ensure any changes brought to this budget will be less than full measures. The FTSE, for its part, still has 35% of its constituents trading above their 200-day moving average. This shows there is still some core strength to investment benefits of an index yielding 4.49%.

Equities' position as the most attractive home for cash is less compelling, especially as some sectors have found dividend yields difficult to maintain. The fact that 70% of the FTSE is above its ten-week moving average does suggest investment funds are only willing to let the prices fall so far before finding the value compelling enough to re-enter the markets.

After the first hour of trading, the FTSE is trading 40 points lower. The major contributors to this fall have been the basic materials sector (accounting for 14 points), the oil and gas sector (accounting for 8.5 points), and the financial sector (5.7 points).

Sainsbury’s has posted impressive figures as sales look to have finally broken the last two years of malaise. Considering it has just increased its bid for Home Retail Group – the owners of the Argos brand – this boost to the share price is particularly timely. Ocado, on the other hand, needs to act quickly as its corporate plan appears to be unraveling. The agreement it has in place with WM Morrison looks less binding, with the grocer having embarked upon a new agreement with Amazon and still struggling to gain the foothold in customer loyalty it would like to have. 

FTSE risers and fallers (as of 9.50am)

Company % change Index points
Glencore +7.13 +4.59
Vodafone +1.36 +3.06
GlaxoSmithKline +1.07 +2.84
Reckitt Benckiser +1.24 +2
HSBC +0.51 +1.75


Company % change Index points
Royal Dutch Shell A -0.33 -0.80
Aviva -0.97 -0.75
BP -0.26 -0.64
Royal Dutch Shell PLC B -0.21 -0.57
Prudential -0.4 -0.54

The day ahead

Economic data:

12.30pm – US retail sales, PPI (February): sales forecast to rise 0.3% MoM from 0.2%, while PPI increases by 0.1%, as in January.

Corporate reporting:

US: Oracle Corp

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.

CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen. 79% van de retailbeleggers lijdt verlies op de handel in CFD’s met deze aanbieder.
Het is belangrijk dat u goed begrijpt hoe CFD's werken en dat u nagaat of u zich het hoge risico op verlies kunt permitteren.
CFD’s zijn complexe instrumenten en brengen vanwege het hefboomeffect een hoog risico mee van snel oplopende verliezen.