Profit-taking holds FTSE back

Momentum in the UK blue-chip index is somewhat lacking this morning, yet the FTSE seems poised to end the week on a five-month high.

Short term, the market looks overbought, and this combined with the mixed corporate earnings emanating from Europe is inciting a degree of profit-taking.

Topping the UK benchmark index, Polymetal International has been the beneficiary of a broker upgrade and has added 3.3% this morning. Q3 revenues, which were released two weeks ago, were well below expectations. But the recent northward moves in gold prices may help to neutralise this going into the final quarter.

BSkyB has been shrugging off challenges from rivals, and continues to dominate the market, so it was no surprise that the share price succeeded in hitting a 12-year high this month. Today has seen some profit-taking, and the share has declined by 2.2%.

A rise of 0.8% in UK GDP for the third quarter, in line with expectations, can only be construed as positive, particularly since it’s the strongest pace of growth in over three years. However, the Bank of England governor has been at pains to temper too much enthusiasm, and it is worth remembering that the UK economy is well below its pre-crisis peak: a whole 2.5% lower. The pound has had a pop at moving higher against the US dollar, and may well present a valiant challenge to the recent nine-month high.

German IFO business climate fell slightly this month, with businesses seemingly less optimistic than before, printing 107.4 against an expectation of 108. The level is still above average, and the slight drop can be attributed to a small fall-back in manufacturing.

With some key, high-profile companies like Facebook and Apple due to report next week, trading may be rather lacklustre today stateside. The Dow is set to open eight points lower at 15,501.

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. 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. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.