FTSE on the back foot

A weak finish last night in the US has put the FTSE 100 on the back foot, down 20 points from yesterday’s close.

We have dropped back from the eleven-week high yesterday, with a disappointing end to the US session primarily to blame. Yesterday the markets succeeded in powering higher, thanks to a fairly rosy interpretation of Mario Draghi’s comments in the European Central Bank press conference. However, the inability of the Dow Jones to hold above 16,600 is a worrying short-term sign for the bulls and may well signal another swift retest of 16,400.

Petrofac led the fallers today, diving 16% after it slashed its net profit forecast for the year ahead. All the gains made over the past three months have been eliminated, and with Johnston Press and Tullett Prebon issuing disappointing updates the atmosphere was firmly negative for investors as the week comes to a close. 

From the action last night on US markets, it is difficult to build a case for further gains from here. The attempt to hold above 16,600 failed, a clear sign that the market still lacks a catalyst to drive it higher. The search continues, but when dovish central bankers and a reasonably benign earnings season are insufficient, investors will be asking what is really going to drive this market higher. If the answer is ‘nothing’, then the outlook seems more than a little negative for stocks. 

Ahead of the open, we expect the Dow to start 20 points lower at 16,530.

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.