Europe climbs as the FTSE falls

As European leaders have started the latest EU summit discussions, European equity traders have cautiously headed higher while FTSE traders have fallen away.

Source: Bloomberg

The FTSE 100 has spent all day struggling to keep up with the rest of the European equity markets. In fairness the FTSE has been hampered from the start, dropping 24 points due to such heavy weights as AstraZeneca, GlaxoSmithKline and Shell all going ex-dividend today. In contrast, the DAX has once again shown the form that has led it to be one of the best performing indices in Europe since the financial crisis.

Part of the reason why the FTSE has struggled has been the ongoing discussions that David Cameron has been having in Brussels with his European counterparts. The success of these meetings could go a long way in dictating how the UK perceives the value of remaining in the EU.

A reflection of how important this is to the eurozone can be gauged from the comments of EC President Jean-Claude Junker, 'I’m quite confident that we will have a deal', as well as Angela Merkel, 'keeping Britain in the EU is not just in Britain’s but also in Germany’s interest, and that of Europe as a whole.'

With this being the case, it is likely that if push comes to shove the EU members will show increasing flexibility in order to help maintain the status quo. The IG Brexit binary still gives a 67% chance of the UK voting to stay inside the EU.

Regardless of the fact that Iran and Iraq agreed to nothing yesterday, and the terms of the Saudi-Russian discussions the previous day would do little to alter the supply/demand imbalance, oil prices have climbed by over 2.5% today.

Gold has also shown some resilience up by 0.5%, and is now trading around $1215, giving the gold bugs some hope that last week’s brief trip above $1250 was more than just a one off. A close above $1214 could pave the way for a fresh move up to $1232 and then onto $1263.

FTSE 100 risers and fallers (as of 4.30pm) 

Company % change Index points
Centrica +6.85 +2.62
National Grid +0.92 +1.29
International Consolidated Airlines Group +2.56 +0.97
BT Group +0.62 +0.93
BAE Systems +1.14 +0.7


Company % change Index points
GlaxoSmithKline -3.09 -8.35
Royal Dutch Shell A -3.23 -8.15
Royal Dutch Shell B -3 -7.54
AstraZeneca -3.51 -7.39
HSBC -1.77 -6.17

The day ahead

Economic data:

5am – Bank of Japan monthly report: traders will be looking for clarification as to why the BoJ introduced negative interest rates.

9.30am – UK retail sales and core retail sales (January): retail sales MoM expected 0.7%, prior -1% and YoY expected 3.5%, prior 2.6%. Core retail sales: MoM expected 0.7%, prior -0.9% and YoY expected 3.5%, prior 2.1%.

1.30pm – US CPI and core CPI (January): inflation is expected to increase to 0.03% from -0.1% MoM and tick up to 0.76% to 0.7% YoY. Core inflation is anticipated to rise to 0.2% from 0.1% MoM, and hold steady at 2.1% YoY.

1.30pm – Canada CPI and core CPI (January): the forecast is for MoM CPI to come in at 0.1%, from -0.5% and the YoY reading is anticipated to be 1.67%, up from 1.6%. Core CPI is expected to rise to 0.2% from -0.4% MoM, and remain at 1.9% YoY.

Corporate reporting:

Standard Life, Segro, Allianz, Coca-Cola Co Deere & Co

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