FTSE starts year lethargically

The normal January buyers have yet to materialise as the FTSE sits 32 points lower.  

Canary Wharf
Source: Bloomberg

The opening hours of trading on 2 January, when 2015 funds are finally available to be invested, normally sees a sprightly start to the trading day, but after a couple of hours this has failed to materialise.

This month is already looking particularly important as a possible road map for the year ahead, with expectations high surrounding some form of European QE and the results of a Greek general election both due before the end of the month. Fears that a considerably more anti-austerity party will take over from prime minister Antonis Samaras and disrupt the fragile stability that currently exists around Europe look to be giving investors a more cautious trading mindset.

This morning’s plethora of manufacturing PMI figures for Italy, Spain, EU and the UK have left no one in doubt that New Year’s resolutions to improve have been short-lived.

There is still the US final and ISM manufacturing PMI figures to come today, and if last year’s template of ‘worsening euro data and improving US data’ continues, we can be optimistic for the US to outperform Europe’s worst-than-expected data figures.

Much of Asia has been closed for bank holidays and Europe has set off at a lethargic pace, placing most of the burden for excitement squarely on the shoulders of the US. Leading from the front and setting a more optimistic outlook is something the US spent much of 2014 doing.

Ahead of the open we expect the Dow Jones to start 47 points higher at 17,870.

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