FTSE drops as gains for indices look weak

Small gains in indices this morning are already looking shaky, with the FTSE 100 rapidly shedding ground and slipping back below 6500.

London city skyline
Source: Bloomberg

The oil-inspired selloff continues to dampen any pre-Christmas optimism, although opportunistic shorters are still keeping one eye on the oncoming ‘Santa Rally’ that is likely to kick off from next week.

The traditionally strong end-of-year period means that this week’s blip is potentially a gift for investors looking to spruce up their final performance figures for the year, and thus any weakness in coming sessions is still going to go into the ‘buying opportunity’ column.

Retailers have hit the headlines in London, as Sports Direct and SuperGroup posted updates. The former did well, hitting all the right notes, and in the right order, as it reported continued expansion in Europe along with a rise in earnings. However, the latter’s torrid year has seen no improvement thanks to the unseasonably warm weather of October.

An admittance of shortages in key lines reminds investors that this is a company that still hasn’t found its footing and continues to grapple with issues that, by now, should have been long sorted.

Eurozone watchers will be waiting to see what comes of the latest European Central Bank TLTRO operation, and while demand is expected to be stronger than the last time it still may not be enough to quell the idea that the ECB will be forced into quantitative easing in 2015.

The afternoon calendar is dominated by US retail sales figures, although energy stocks will remain under the spotlight after yesterday’s dive in oil prices. A steady climb higher in futures overnight indicates that dip buyers have not been entirely deterred by the dire price action. US consumers will be enjoying their pre-Christmas gift of lower oil prices, which should help to provide a sunnier outlook for retailers in the New Year. 

Ahead of the open, we expect the Dow Jones to start 50 points higher at 17,583.

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.