Gloomy start to August for FTSE

With such gloomy sentiment from both the US and Asian markets it is no surprise that the FTSE 100 has dropped by over 40 points in the first hour of trading.

Clouds gather over Canary Wharf
Source: Bloomberg

The start of a fresh month has come as a welcome relief for traders, even though the FTSE starts this month only 13 points lower than it started July. Lost momentum and global concerns are weighing heavily on investor outlook – no surprise when you consider that Portugal’s largest lender is possibly going to require re-financing as its shares tumble over 40%. Argentina has once again defaulted on its sovereign debt and the situations in Ukraine and Gaza show no sign of abating.  

International Airlines Group has posted a first-half operating profit and impressed the markets with its confidence in pushing ahead with upgrades to their carrier fleet; all the more encouraging when you consider both the currency implications and the difficult fuel hedging market. Fund management firm Man Group has warned of continuing difficulties during the rest of the year, and even with funds-under-management increasing by 7% the shares are off by 4.5%. 

After dropping almost 2% yesterday and finding itself almost back to levels seen at the beginning of the year, US Dow futures have traded a little more positively this morning, looking destined to being driven by the day's economic data releases. An hour before the US markets open we will see the latest non-farm employment change along with the underlying unemployment level, hourly earnings and personal spending. Currency traders as well as equity traders will be closely monitoring this as they are all boxes that will need to be ticked in order for the Federal Reserve to seriously debate a start date for any increase to the US interest rate.

Ahead of the open we expect the Dow Jones to start just 5 points higher at 16,568. 

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.