FTSE puts in a battling performance

Despite the weak sentiment of European equity markets, the FTSE 100 has held above 6,050.

London City
Source: Bloomberg

European equity traders were not quick out the blocks as the relaxed weekend mentality prevailed in the first couple of hours trading. Eurozone inflation figures at 10am however sharpened the focus, not just missing the mark as far as expectations were concerned but tumbling to a deflationary position.

Last month’s posting of the CPI flash year on year inflation was 0.3%, and markets were looking for this to come in flat. However, the first contraction since September 2015 knocked investor confidence. As much as this eroded European equity markets, the FTSE 100, which has its own issues to worry about, has remained relatively resilient, spending most of its day oscillating around its 100-day moving average of 6069.

Tomorrow will see both a corporate and economic data heavy day and it is maybe now a real surprise that investors have been reluctant to move the markets too far in any one direction before having a chance to digest all of this news flow.

This time last week, sterling was in full flow panic mode, however even with Conservative heavy weight Ian Duncan Smith siding with the better out campaign, the currency has been considerably more measured with its moves.

A week into a four month campaign to decide our membership in the EU, worries and uncertainties will keep pessimism in place while the outright panic of last week might be reserved for the final few days before voting.

Having hit multi year lows, the next target for GBP/USD bears could well be the January 2009 lows of $1.3504, not a journey that will be done in a straight line but arguably the next major level of support.

Gold has again continued its lateral move resisting the temptation to sell-off, a strategy so frequently used in the recent past, yet unable to gain enough sympathisers to once again break above expectations. Considering the fragile mentality of gold traders seen so frequently over the last few years, the fact that we are still yet to decide in which direction the precious metal will move is a result for the gold bugs.

Both Brent and WTI continue to defy gravity, ignoring the oversupply in the market and the overcapacity of oil inventories too. Much of the last three trading day’s moves must be attributed to oil traders juggling their books, as the underlying fundamentals for oil remains unchanged with struggling demand and oversupply likely to send prices tumbling sooner or later.

 FTSE risers and fallers (as of 4pm)

Company % change Index points
Glencore +3.94 +2.29
Barclays +1.74 +1.93
Rio Tinto +2.07 +1.84
Anglo American +5.44 +1.25
Royal Dutch Shell A +0.46 +1.09


Company % change Index points
HSBC Holdings -1.82 -6.47
AstraZeneca -2.77 -5.73
GlaxoSmithKline -1.31 -3.51
Shire -3.13 -2.8
Imperial Brands -1.37 -1.93


The day ahead

Economic data:
12am – China FX reserves (February): FX reserves are expected to fall to $3.159 trillion from $3.23 trillion.

1am – China manufacturing PMI (February) and non-manufacturing PMI (February): manufacturing is anticipated to fall from 49.4 to 49.34. Non-manufacturing is expected to fall to 53.47 from 53.5. 

1.45am – Caixin China manufacturing PMI (February):   expected 48.53, prior 48.4.

3.30am – Australia interest rate decision and statement: the forecast is for rates to be held at 2%.

8.55am – Germany unemployment change (February) and unemployment rate (February): unemployment is anticipated to decline by 6,000 which compares with the 20,000 decline in January. Unemployment rate is expected to remain at 6.2%.

9am – eurozone manufacturing PMI (February): manufacturing is expected to fall to 51 from 52.3. 

9.30am – UK manufacturing PMI (February): expected 52.38, prior 52.9.

1.30pm – Canada GDP (Q4): QoQ expected -0.19%, prior 0.6%. YoY expected -0.3%, prior 2.3%.

3pm – US ISM manufacturing (February): manufacturing is tipped to come at 48.45, up from 48.2.

Corporate reporting:

Full year earnings: Barclays, Direct Line Insurance Group, Glencore, Moneysupermarket.com, Regus, Taylor Wimpey, Tullett Prebon,Fresnillo, Greggs, Just Eat

Half/Quarterly earnings: Ashtead Group

Trading update: General Motors Co, Tata Motors Ltd

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