Ebola screenings trigger fresh selling

Heading towards the close and surrounded by a sea of red, the FTSE 100 looks set to drop down by at least 80 points. 

Medical equipment
Source: Bloomberg

Airline sector benefits from Ebola screenings

Regardless of how pleased George Osborne might have been that the International Monetary Fund has maintained the UK’s growth forecast, the fact that almost none of the eurozone avoided a downgrade will be a worry. Certainly equity markets have reacted to a steady decline in German economic data with the DAX hitting lows last seen over 12 months ago.

The powerhouse of Europe has failed to drag the rest of Europe into the next phase of recovery and is increasingly looking like it will be dragged back into recession due to the burden of its neighbours.

The dramatic U-turn in deciding that UK boarders will embark on screening for signs of Ebola has been the green light in a fresh round of selling to the airline, hotel and travel sectors. Having fought off an acquisition from US company Destination Maternity less than six months ago, Mothercare has announced a rights issue to raise £100 million. The money will be used to continue the aggressive restructuring designed to enable the company to reduce its stores and become more streamlined.

Dow could move over 200 points

It says something about investors' mindsets that today’s 150-point range in the Dow Jones is the quietest of the last four trading days. With Friday's trading still to end this could become the fourth day in a row where the Dow has had moves of over 200 points. All of this has seen the VIX fear index spike above its 200-day moving average, something it has not done for over six months.

As Monday is a Columbus bank holiday in the US in the middle of the third-quarter reporting season, we would naturally expect to see traders reduce their equity exposure anyway. 

Considering the scrutiny that US regulators have focused on the banking sector, Tuesday is all set to be a key day with JP Morgan and Citigroup both posting figures.

Good week for gold

Gold has had a good week having added over $40 to its share price and broken swiftly back up above the psychological $1200 level. After four very solid days, albeit aided by both moves in the US dollar and dovish comments from the Federal Open Market Committee, it is unlikely commodity traders will begrudge the precious metal a lazy fifth day.

Brent crude has had no troubles to seek but this week’s IMF downgrade in growth for most of Europe has compounded the perception of dwindling demand coupled with robust OPEC production.

GBP/USD sees 200-point bounce

The start of the week has seen GBP/USD open below the $1.60 level but an aggressive 200-point bounce saw investors wondering if this was finally a turning point. Friday's trading has answered these questions with a resounding 'No'. EUR/USD has suffered a similar fate and even European Central Bank president Mario Draghi’s speech in Washington has done nothing to alter the perception that the eurozone is a region whose recovery is grinding to a halt.

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.