Volatile US session knocks FTSE back

In mid-morning trading the FTSE 100 is down 40 points, after a volatile session on Wall Street.

The City of London
Source: Bloomberg

Six months of frenetic activity have left the FTSE 100 barely 20 points higher from where it started the year. Yet again light volumes are seeing the market move back and forth on little news, with worries about Iraq having replaced the Federal Reserve as the big concern.

US markets dropped by a whopping 0.7% last night, but it was the rapidity of the move, rather than the actual percentage change, that should serve as a warning that markets are still vulnerable. Compared to what could happen if the Iraq situation really worsens, such moves are just ripples on the surface. Already this morning major indices have bounced off their lows, proving the truth of the current adage that no dip in this market is too small to be bought.

The Dow’s decline last night means it is barely two-thirds of 1% off its all-time highs, and thus the default setting should still be bullishness, if with a greater degree of caution. More bad news is expected on US GDP, but given we’re now on the cusp of Q3 the impact of even a significant downward revision is likely to be minimal. Durable goods should carry more weight, but already futures are beginning to edge higher, indicating there are still buyers willing to step in. Ahead of the open, we expect the Dow Jones  to start 23 points higher at 16,841.

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.