Markets creep higher as new week begins

In mid-morning trading, indices remain mixed, although the FTSE 100 has clawed its way off Friday’s lows.

City of London aerial view
Source: Bloomberg

It was a gloomy end to last week, but some hints of positivity are seen this morning as investors try to put the Fed’s statement behind them. The FTSE remains stuck in the trading range that has held throughout September, and with little fresh news over the weekend to drive trade what we are seeing this morning is a rebalancing of positions, as shorts take profits from Friday’s big downward move and brave buyers step in once again. The week will get busier, once PMIs from China, the eurozone and the US are out, and then the real test of bullish sentiment will be seen. Overall, Janet Yellen’s caution is still the thing that weighs most heavily on everyone’s minds.

Volkswagen shares have been hit hard by news that the company was using some nifty programming to toy with emission regulations. The news so far revolves around the US impact, but if European investigators become interested the potential penalties could multiply very quickly.

In London RSA Insurance tumbled as Zurich abandoned its takeover. With the shares now trading back to where they were pre-bid, investors are reassessing their view of the firm, and the current impression, stuck as it is in a long-term turnaround operation, does not lend itself to a cheery view.

US markets will be looking to see if they can claw their way higher this afternoon. We may see some read-across to US carmakers as a result of the VW news, which could see some big names come under pressure. With only existing home sales on the calendar for the afternoon, post-Fed sentiment will still be the key driver. Ahead of the open, we expect the Dow Jones to start at 16,452, almost 70 points higher.

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.