Airlines drag FTSE lower

The FTSE 100 has slipped back below 6800 once again, with airline shares and M&S in focus this morning.

KLM planes
Source: Bloomberg

This latest leg of the equity rally is being subjected to ‘death by a thousand cuts’, driven primarily by a lack of good news – what little economic data there has been has tended to the downside, giving a further excuse to sell risk assets.

Airlines dropped after Air France-KLM became the most recent flag carrier to warn on profits, and with travellers around the world contemplating the prospect of having their phones et al confiscated at security, there are plenty of reasons to be gloomy about the trading outlook for airlines. 

Meanwhile, Marks & Spencer’s latest update contains fresh reasons (or ‘excuses’ for the less charitable) for poor performance, but the shareholders will be right to ask why the company felt that it was the right time to overhaul its website, when sales continue to slide. As with a lot of household names, it all seems a bit ‘too much, too soon’ for M&S. 

Sterling was on the back foot for a change after terrible UK figures; a turnaround in UK figures will make Bank of England meetings even more mundane, banishing the hawks and talk of an early rate hike.

Just as no dip in US indices is too small to be bought, no top on Wall Street at present is too small to be used as the start of the long-awaited ‘major correction’. So long as everyone keeps looking for it, it is unlikely to materialise.

Earnings season kicks off today, with Alcoa taking its usual over-hyped spot, but the focus will be on whether US companies can manage a bounce back from the first quarter, mirroring the shift in economic news.

Ahead of the open, we expect the Dow Jones to start 28 points lower at 16,996.

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. 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. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.

Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 79% of retail investor accounts lose money when trading spread bets and CFDs with this provider. You should consider whether you understand how spread bets and CFDs work, and whether you can afford to take the high risk of losing your money. Spread bets and CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage.