FTSE 100 set to open below 5000

The FTSE 100 is set to open lower by 50 points and back below the 5000 level on Monday following on from a broadly weaker session in Asian trading.

The Nikkei and Hang Seng both traded lower on the day despite muted attempts rally to the upside whilst US markets also traded heavily lower into their respective closes on Friday night. This is likely to start investors on the back foot when European trading begins on Monday morning.

There is a lack of significant economic data to come out today, whilst company earnings is also thin on the ground for Monday, and so this could certainly help to free the hands of investors somewhat once the session gets started. That said, volatility is likely to remain this week as investors position themselves for the meeting of global central bankers in Jackson Hole, Wyoming at the end of the week. Don’t forget that it was at the Jackson Hole meeting last year that Bernanke first raised the potential to start a second round of quantitative easing to help spur on the US economy and so naturally investors may be getting a sense of de ja vu, particularly when economic data points to a significant softening of US growth.

Gold has hit yet another new record high of $1879 today which shows that investors continue to hedge themselves against stock price falls by recycling funds into the safe haven asset class. The continued high Gold price is countering the sincerity of many of the market rallies we have seen over the last week, whose choppy nature emphasises the fragility of investor sentiment.

Anglo American shares could be set for a lively start after reports this weekend that the miner may join the battle for Australian coal miner Macarthur Coal. Share prices of Macarthur rose in Australian trading this morning on speculation of a potential bid auction, with any emergence of a rival to Peabody and Arcelor-Mittal’s hostile bid likely to help the firm’s board to attract higher offer prices.”