Improved Sentiment and Johnson Matthey push FTSE higher

Ignoring the negative sentiment that dragged on trading in US and Asia overnight, the FTSE bounded higher on Wednesday. Snapping a three-day losing streak and with only a handful of firms in the red, the FTSE managed to power back through 7000. Bank were notable risers as was Johnson Matthey, which jumped over 10% after first half results surprised to the upside.

Sales at Johnson Matthey increased over 10% whilst underlying profits grow by 8% to £271 million. The Clean air division at the firm has grown over 10%, driven by demand from Europe, amid tighter European emission regulations. Investors are recognising that Johnson Matthey looks to be sitting on a gold mine with its Clean air division. We only realistically expect European emission regulation to tighten further – and this is being reflected in the share price.

Sterling holding its nerve amid Brexit headlines
The pound acted as neither support or resistance to the FTSE, trading flat around $1.28 for most of the session. Pound traders were holding their nerve as Theresa May headed to Brussels to try to finalise the Brexit deal and to put the finishing touches to the political declaration on future partnership. There were still some creases that need to be ironed out and back home the Eurosceptics will be hoping for some last minutes adjustments to the deal. They are likely to be disappointed, as May appears set to continue ploughing ahead with the Brexit plan as it stands; a position which is offering some support to the pound in later trading.

Italian bond yields drop despite Italian budget rejection
Today was a key date in the diary in the ongoing clash between Brussels and Rome. Despite the European Commission rejecting Italy draft budget plans and recommending disciplinary procedures, Italian debt rallied, pulling yields sharply lower. Italian Prime Minister Matteo Salvini’s defiance, vowing to keep the budget deficit target at 2.4% had little impact on yields, which dropped over 3% on the day.

Apple has lost its mojo
After extensive selling earlier in the week, Wall Street was on the rebound. Tech shares were doing some of the heavy lifting with Facebook up 2%, with Amazon and Netflix not far behind. Apple was also trading higher after two days of heavy selling; the stock was up 0.2% at the time of writing. This move higher is lacklustre at best and won’t be convincing any investors that we are witnessing a turnaround after the stock fell into bear market territory. On a good day Apple is tagging along behind the rest, on a bad day it is tumbling lower; a sign that the Apple momentum trade is over.

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.

CFDs are complex instruments and come with a high risk of losing money rapidly due to leverage. 69% of retail investor accounts lose money when trading CFDs with this provider. You should consider whether you understand how CFDs work and whether you can afford to take the high risk of losing your money. CFD and Forex Trading are leveraged products and your capital is at risk. They may not be suitable for everyone. Please ensure you fully understand the risks involved by reading our full risk warning.

City Index is a trading name of StoneX Financial Ltd. Head and Registered Office: 1st Floor, Moor House, 120 London Wall, London, EC2Y 5ET. StoneX Financial Ltd is a company registered in England and Wales, number: 05616586. Authorised and regulated by the Financial Conduct Authority. FCA Register Number: 446717.

City Index is a trademark of StoneX Financial Ltd.

The information on this website is not targeted at the general public of any particular country. It is not intended for distribution to residents in any country where such distribution or use would contravene any local law or regulatory requirement.