Stocks Point Higher Ahead of FOMC
The Fed meeting comes as US stocks markets have risen to unimaginable levels given the scale of the coronavirus crisis impact on the economy. The Nasdaq passed through 10,000 for the first time on Tuesday. Strong gains in tech related shares made the Nasdaq a global outperformer. The S&P had also erased all gains for the year on Monday, although a slight sell off yesterday pulled the index back into red on the year.
FTSE underperformer
In comparison the FTSE is a clear underperformer compared to its US counterparts or even the Dax here in Europe. The FTSE is still down -15% on the year, the Dax is just -2%. This is partly to do with the make up of the FTSE - the fact that it has fewer tech stocks, which have surged in lockdown and is more heavily weighed towards mining stocks and oil stocks. Commodities fell hard, particularly oil and their recovery is proving to be much more drawn out, not helped by the disappointingly slow road to recovery for China, the world’s largest metal consumer.
Data overnight showed Chinese inflation at factory level fell -3.7%, worse than the -3.3% forecast and down from 3.1% in April. Consumer inflation was also weak, falling -2.4% yoy. The disappointing data shows that demand remains weak and domestic recovery wasn’t gaining traction a quickly as hoped.
FTSE is set to lag its peers on the open.
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