FTSE lags behind European peers
The FTSE proved unable to hold onto early gains, spending the afternoon lagging in the red behind its European counterparts. Whilst the Dax was enjoying a jump of 0.4% across the finishing line on Monday, the FTSE was looking at a 0.3% loss. Dominating the loser board were the likes of GKN following another following another hostile bid from Melrose, and Just Eat following a broker downgrade. Precious metal miners Randgold and Fresnillo were also among the fallers tracing metal prices lower, as investors ditched safe havens such as gold in favour of riskier assets.
Industrials weigh on Dow; Nasdaq hits fresh intraday high
With Trump easing off the trade tariff rhetoric and the geopolitical environment improving investors have been looking to get risk back on the table as the new week kicks off. On the whole, global equity indices had pushed higher, in Asia and then in Europe. However, all-time highs in Goldman Sachs and Apple were insufficient to keep the Dow in positive territory and the index quickly dipped 150 points under the weight of big industrial including Caterpillar, Boeing and United technologies. Meanwhile the S&P is seen trading flat and the Nasdaq is up an impressive 0.6% hitting a fresh intraday high of 7598.
The week Feb 9th the Nasdaq shed 5.1% in its worst weekly drop in 2 years. In exactly a month the Nasdaq has picked itself up recovering completely from the selloff. The stunning recovery in the Nasdaq could be the result of several factors coming together. Firstly, the correction in early February, pulled the FAANG stocks back to very attractive levels. Investors are always going to be quick to jump into stocks that look cheap relative to performance. Secondly the boost to the Nasdaq comes as investors are seen repositioning portfolios and seeking shelter from any potential trade wars in tech stocks an industry which is far removed from the steel and aluminium industries being targeted.
Dollar lower as investors eye inflation report
The mood towards the dollar remained soft at the start of the new week, as investor fears over runaway inflationary pressures and a more aggressive pace of interest rate rises eased. Friday’s weaker than forecast wage growth, despite an impressively strong number of workers joining the US labour force, meant investors reassess the possibility of four rate rises across the remained of the year.
With no high impact US economic data due today, investors are already looking ahead to the final few influential releases before the FOMC meeting next week. Inflation numbers will be the central focus moving into Tuesday. However, any additional signs of inflation deceleration could see the dollar fall further.