Range trading is the order of the day

In mid-morning trading the FTSE 100 is down over 40 points, as both German IFO data and UK GDP fail to inspire traders.

The FTSE 100 continues to bounce around in its current trading range. Having tested the top range yesterday, it now looks minded to hover towards the lower end. It might be unfair to blame the current negativity on Wall Street, but the longer US markets dithered ahead of new highs the greater the likelihood that the bears would take the chance to push major indices lower. However, this morning’s data from Germany and the UK suggests that momentum to the downside is just as limited as that on the upside at the moment, which probably condemns us to a few more days of purgatorial range trading.

First the royal baby, and now GDP growth. UK growth figures were in line with expectations, with the economy expanding by 0.6% between the first and second quarters. Thankfully for the government, all four major sectors are advancing, for the first time since the third quarter of 2011. We can always wish that growth was stronger, but compared to previous quarters this is almost a strong reading. However, I don’t think the Bank of England can abandon its sickbed watch just yet, as there is still a long way to go. Earnings have come in thick and fast today, but despite a promising update from Rolls-Royce Group the market has taken a decided turn for the worse, dropping firmly away from 6600.

1700 looks to be firmly off the agenda for the US 500 this week, with a generally positive set of earnings and economic data unable to hold this market up. At least tech stocks are doing better than last week, with Facebook keen to ‘share’ its success with the market and investors ‘liking’ the numbers released last night. Ahead of the open, we expect the Dow Jones to start 40 points lower at 15,500.

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