FTSE sheds early gains

In mid-morning trading, the FTSE 100 is 10 points higher, as early gains evaporate across Europe.

Source: Bloomberg

Early optimism on the London market has faded as investors continue to fret about the situation in Chinese markets.

As in August, state-directed buying of stocks is competing with individual selling of equities, but China’s latest attempt to ‘buck the market’ is likely to end as well as its efforts last year.

The butterfly effect has been felt in Europe again this morning, with an initial bounce giving way to more selling, while in London the FTSE is fighting hard to hold on to small gains.

The year 2016 got off to a very poor start for markets yesterday, but today looks to be little better, with bringers of good news evidently yet to return from their holidays.

Retail titan Next has seen its shares hit multi-month lows this morning, as it released what may be a profit warning in all but name. For a firm that once seemed to have the Midas touch, the fumbling of stock levels ahead of a key period for trading indicates that not all is well in the Wolfson empire.

US futures have turned lower once more, eroding the gains made late in Monday’s session and heading rapidly back to the lows seen yesterday.

US markets are showing distinct signs of fatigue after their multi-year run, but with earnings growth on the slide and Federal Reserve tightening jitters front and centre, it will be hard to cobble together a narrative to get the post-2008 bull market back on track.

Ahead of the open, we expect the Dow Jones to start at 17,110, down 38 points from Monday’s close.

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