Market News & Analysis

Top Story

Pound weakness supports FTSE; investors look to Powell

The FTSE has been faring better than its European counterparts, thanks to the sinking pound. Whilst the Dax and the Eurostoxx 50 were down around 0.8% and 0.3% respectively, the FTSE less at 0.2% lower on the day.

Ocado delivering impressive results secured it a place on the top of the FTSE leader board, gaining 6% across the day. 
Melrose was the biggest decliner dropping some 7%, although the exact cause for the selloff remains unconfirmed. With the stock experiencing its worst session in 5 years we would expect a direct negative news report to have hit the wires. So far this hasn’t been the case. 

Pound drops to 2 year low
The pound was offering support to the FTSE. Sterling dropped to its weakest level in 2 years of $1.2440 as recession concerns coupled with fears over Brexit are proving too much for pound traders to swallow.
Today the BRC revealed that retail sales slumped -1.6% year on year, confirming that any wage rise UK households are enjoying is not being reflected at the tills.
Finally, the prospect a no deal Brexit is running high. The House Speaker Bercow preventing MP’s from voting on an amendment to stop the next PM from proroguing parliament for a no deal Brexit has done little for the prospect of avoiding a disorderly Brexit. In addition to the pound taking a hit, tourism stocks such as TUI, IAG and easyJet fell over 3%.

Up next:
FTSE traders will look towards UK GDP data and Federal Reserve Powell’s testimony for direction. A weak GDP reading could drag the pound to fresh 2 year lows which could offer support to the FTSE. Should Powell focus on the risks facing the US economy, US rate cut expectations could rise boosting stocks across the globe. The FTSE could be pushing above 7600 sooner rather than later.



From time to time, GAIN Capital Australia Pty Ltd (“we”, “our”) website may contain links to other sites and/or resources provided by third parties. These links and/or resources are provided for your information only and we have no control over the contents of those materials, and in no way endorse their content. Any analysis, opinion, commentary or research-based material on our website is for information and educational purposes only and is not, in any circumstances, intended to be an offer, recommendation or solicitation to buy or sell. You should always seek independent advice as to your suitability to speculate in any related markets and your ability to assume the associated risks, if you are at all unsure. No representation or warranty is made, express or implied, that the materials on our website are complete or accurate. We are not under any obligation to update any such material.

As such, we (and/or our associated companies) will not be responsible or liable for any loss or damage incurred by you or any third party arising out of, or in connection with, any use of the information on our website (other than with regards to any duty or liability that we are unable to limit or exclude by law or under the applicable regulatory system) and any such liability is hereby expressly disclaimed.