FTSE falls ahead of Fed speech

In mid-morning trading the FTSE 100 is down 15 points in the absence of any real corporate or economic catalysts, dragged lower by soft US futures and nervous traders.

Prior to this evening's Federal Reserve comments which are likely to cover the dreaded QE 'tapering' issue, and tomorrow's EU quarterly GDP figures confirming the EU’s success in climbing out of recession, FTSE traders may well be tempted to keep their powder dry. As we are deep in the heart of the summer holiday season it's likely we will once again see equity volumes struggle to set any records.

Last night's Japanese GDP figures have left Asian markets disappointed. Slowing growth hints towards a nation struggling to come to terms with the new Abenomics that have been thrust upon them, and the planned 3% increase in sales tax due in April looks considerably less likely. European traders will be asking themselves if is this a result of a failed effort to weaken the yen, or the template for struggling GDP figures around the globe.

It could be worth keeping an eye on RBS after business secretary Vince Cable announced over the weekend that the bank is unlikely to be sold off until 2018. Not renowned for his adherence to singing from the coalition’s hymn sheet, it will be interesting to see what conflicting comments might appear over the week.

Prudential, having had its fingers badly burned three years ago with the failed bid to acquire AIA, can feel suitably smug with itself having posted some excellent figures this morning. On the back of that they had set some tough targets which have almost all been met, especially the increased profitability in Asian markets.

Following a lacklustre end to last week's trading which saw the Dow drift into the close and lose almost 2% over the week, bulls will be hoping that tonight’s Federal budget balance figures will offer equity markets some much-needed enthusiasm. It's quite possible that traders will hone in on any comments about tapering of the US QE policy, once again allowing ample opportunity for misinterpretation. Ahead of the open, we expect the Dow Jones to start 70 points lower at 15,355.

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