While we may have made a fresh new all-time high on the FTSE
100 earlier this week the follow through so far has been pretty lacklustre, which is rather an unusual state of affairs when such a significant barrier is breached, particularly given how the German and US benchmarks reacted when they pushed through their previous peaks. It’s almost as if investors remain unconvinced as to the strength of the current rally.
Unfortunately none of this is anything new for the FTSE100, as it’s been a serial underperformer for the best part of the last five years.
That isn’t likely to change now, despite the fact that the UK economy still remains one of the best performing in the G7.
The same looks set to apply today with a lower open expected across the board in Europe
after US markets struggled to push on from their new all-time highs earlier this week.
It would appear that with concerns about Greece starting to slip away in the short term
, though given the political divisions playing out in Athens right now, as a result of Syriza’s compromises it would pay to be not too complacent.
In this context it would appear that investors are looking for the next catalyst to drive market direction,
given that the Federal Reserve gives no indication that it remains anyway nearer making a move on policy.
Given Bank of England governor Mark Carney’s remarks earlier this week, and the fairly even handed comments from Fed Chair Janet Yellen over the past two days, it would appear that neither central bank has any better idea about what prices might do over the next few months, than the markets do.
It is apparent however that both rate setting committees are worried about falling prices
, hence the reluctance to give any clear signals on a policy tightening at this point in time.
As far as today is concerned we get the latest update on the UK economy with the second reading of Q4 GDP
, which is expected to be confirmed at 0.5%, annualised to 2.7%. We aren’t expecting too much in the way of adjustments to the internals, though imports and exports could well get revised up.
Business investment will also be scrutinised
given that we saw an initial fall of 1.4% in the first instance, a few weeks ago, no doubt driven by some uncertainty, due to the Scottish referendum, at the beginning of the last quarter. As more data comes in the hope is that this picked up in the wake of the vote.
In Europe the German economy is set to prove itself once again the star performer in Europe
with the latest unemployment numbers for February showing a decline of 10k, while the headline rate is expected to remain unchanged at 6.5%.
Earlier this week we also saw Q4 GDP numbers show surprising resilience
with domestic demand looking surprisingly strong. This should be reflected in this morning’s Gfk consumer confidence numbers for March, which are expected to rise again, to new multi-year highs at 9.6.
– the euro broad range remains intact and continues to find support above 1.1270, with the larger key support at the 1.1205 level. Resistance remains near the 1.1450 level, with resistance behind that at the highs this month at 1.1530. This remains the next target on a move through 1.1460.
– having broken above 1.5480 we look set for a move towards 1.5600 initially and then on to the 1.5800 level. For now pullbacks should find support at 1.5460, and below that in the low 1.5300’s. Only a move back below the 1.5280 area argues for a move back towards 1.5200 and a retest of the 1.5000 lows this month.
– while below the 0.7460 level the pressure remains on the downside and a move towards the 0.7250 level.
– having topped out at 119.80 earlier this week the US dollar has slid back, dropping back sharply as the current range remains intact. With support at the 118.20 level, and resistance at the 119.80 level, we would need to see a break either side to determine the next move with a resumption of the recent down move, and a return towards the 117.00 level preferred.
CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.