Market News & Analysis
FTSE recovers as Wall Street opens higher
Fiona Cincotta December 22, 2018 2:36 AM
The FTSE spent the morning in the red amid concerns of a US government shutdown. Not even strength from the miners, a flurry from the housebuilders and a weaker pound was able lift the depressed mood on the FTSE. Only a stronger start from the US encouraged the UK index to move into the black.
As if the markets haven’t had enough to deal with this year. Fortunately, the prospects of a US government shutdown hasn’t proved to be the straw that breaks the camel’s back. European equities traded lower, whilst the dollar moved higher versus its peers expect the safer haven the Japanese yen. This shows that another key risk adding to the already long list of risks is sending traders searching for cover in safer havens. Wall Street then opened higher as concerns eased.
The dollar was trading higher versus a basket of currencies, despite a hattrick of misses on the data front. Supported by the risk off environment the dollar hit a peak of 96.72. US GDP slipped down to 3.4% from 3.5% increasing concerns over an economic slowdown. US durable goods orders grew just 0.8% missing expectations of 1.6% and inflation increased just 0.1% month on month in November, less than the 0.2% expected. Under usual circumstances these data points would have sent the dollar tanking; this shows the level of concern that there is over a potential shutdown
Data Dampens Mood For Pound
Pound traders digested a mixed batch of data on Friday. Consumer confidence weakened to -14 in November, down from -13 the previous month, despite the improving economic position Wages have been on the increase and inflation has been falling, which should increase consumer confidence. Instead sentiment dropped to its lowest level since 2013 as consumers fret over what the next 12 months hold in store. Brexit uncertainties have resulted in consumers assessment of the coming year to deteriorate to levels last seen following the Brexit referendum.
Weak consumer sentiment in addition to lacklustre UK GDP data and public sector net borrowing at its lowest November level since 2004 kept the pound bears in control. Not even weakness in US PCE numbers could knock the dollar strength.
Bitcoin’s Santa Rally
Whilst Santa gave the financial markets a wide berth, he hit Bitcoin head on. Bitcoin was on track for a 20% jump across the week as investors appeared to be pulling out of equity markets and moving into crypto currencies. Whilst digital currencies had fallen across previous weeks amid regulatory concerns, they were experiencing the closest think to a Santa rally in the markets.
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