FTSE hit by selling pressure

It is another weak start to trading in London as the FTSE 100 tries to avoid a third straight day of losses. Today we have lost around 40 points to 6700.

Canary Wharf
Source: Bloomberg

Bears will be getting excited that another day of selling pressure may bring about the correction they have all been dreaming of.

The traditional first pitch of US earnings season was thrown by Alcoa last night and it was, in fact, a good one. With a comfortable earnings beat and a pledge to push into more sophisticated arenas, on paper at least it is a positive start to the earnings cycle.  

Asian markets were nonplussed however, as weaker-than-expected inflation figures from powerhouse China dampened sentiment there, and the knock-on effect helps explain the underperformance of the FTSE today.

Insurers are feeling the brunt of the bearishness today. Admiral Group (-5%) is heavily lower having warned of a poor first half and a lack of decent growth outlook. It has been joined by Aviva (-3%) who, this morning, announced further belt tightening as part of a long-term turnaround strategy at its capital markets day. Randgold Resources (+2%) lead the risers as gold prices look to catch a bid in the wake of this uptick in market nervousness. 

Whilst the real meat of US earnings doesn’t start to hit us in volume until next week, we are nicely poised having seen markets retrace and a little volatility creep back in. We are currently calling the US markets up slightly, with the Dow Jones at 16,920 up 15 points.

Shorts have had a tough time lately, but it is likely that recent days are more a healthy pullback rather than the start of something more, and until we get further into earnings season there is still little reason to think the markets have truly changed tack. 

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.