Corporate activity unable to stimulate FTSE

Heading into the close the FTSE 100 is just ten points higher, with direction distinctly absent despite sufficient corporate newsflow.

City of London
Source: Bloomberg

Fresnillo tops FTSE

It has not been a day to rank among the most exciting so far this year, as a sparse economic calendar provides little incentive for any significant portfolio adjustments. Headline news is still likely to be dominated by Greece, but this particular problem has little to offer in the way of progress. Suggestions of a new deal will run up against the immovable object of German concern, diminishing any euphoric reaction to a possible solution. However, among individual names there was some good news.

Babcock was around 3% higher after news that its order book had hit a record £20 billion, with other parts of the business doing a sterling job of picking up the slack in its oil and engineering business.

Mexican silver miner Fresnillo sat at the top of the index, boosted by further cost efficiencies that have helped to counter ongoing weakness in metals prices. The firm can be forgiven for hoping that the difficult period in precious metals has come to an end, but it will remain a tricky task to keep investor interest at a time when gold and silver miners appear to have been left behind by events.

US markets await Fed minutes 

The US session opened quietly, with little activity after a strong finish to the week on Friday. ‘Becalmed’ is probably the best way to describe the action this afternoon, and until Federal Open Market Committee minutes hit the wires later in the week US markets could find themselves at the mercy of some modest selling. 

Homebuilder confidence ebbed in May, another sign that the US economy is entering a soft patch. The Fed might yet signal a willingness to hold fire on rate increases, but even this is unlikely to spark another major bounce, given widespread concerns about the outlook for the world’s largest economy.

Oil forecast downgraded

First US GDP and now oil prices – Goldman Sachs has been busy downgrading forecasts of late and oil has not escaped its purview. The rally of recent weeks had led many to think that the great oil bear market had come to an end, but a failure to maintain momentum is indicative that oil traders are still of a broadly bearish disposition. Ample supply is a tale that had seemed to lose its force in the first quarter of the year, but it will return with a vengeance should fresh drilling efforts pick up in the US.

Sellers dominate EUR/USD

The euro has found itself at the mercy of sellers today, bereft of any major economic data. However it looks like rumour and counter-rumour is at work once again with regards to Greece. Clearly we have to go through a period of denial that proposals regarding a solution even exist, but the prospect of keeping Greece within the single currency has predictably led to an outbreak of bearishness on the euro, adding spice to the general profit-taking that was developing as we headed towards $1.14 on EUR/USD.

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