FTSE 100: movers and shakers

The FTSE is little changed so far today, after a torrid start to the week. However, a move below 6,600 has proven to be elusive so far, and attempts to test this level on Friday and Monday were met with some small scale buying interest. This does not mean that a recovery is on the cards, just that the market may take a breather while we wait for key economic data this week, which could determine the future direction of markets.

Key movers include:

• Retailers are in retreat after Next said it may cut its annual profit forecast if this mild autumn weather continues. Expect the rest of the sector to follow suit. Retail makes up about 2% of the FTSE, so a broad-based decline in this sector does not spell disaster for the index, but in an environment of shaky market sentiment it does not bode well. Watch for a similar announcement from M&S in the coming days.

• RBS is the top performer in the banking sector after stating that impairment charges for this year would be lower than expected. Its shares are up some 4%, which has helped Barclays and Lloyds. However, this is not a broad-based move and HSBC and Standard Chartered are both lower.

• Interestingly, HSBC and Stan Chart both have exposure to Asia, and Asian markets are coming under pressure as the anti-China protests in Hong Kong weigh on sentiment. If these protests escalate then these two banks could stay under pressure.

• The Hang Seng is lower again today, although the loss is not broad-based in the region, with Australia’s ASX managing to eke out some gains after another drop in the Aussie. Taiwan’s index is also higher, suggesting that HK protests are not having a contagion impact on the region, at this stage.

• Tesco watch: this stock continues to grind lower, suggesting that there is a dearth of buyers at this stage; it may need to fall further before a recovery takes hold. Watch out for any dead cat bounces.

Other news worth watching:

We mentioned yesterday that central banks are king. The market is patiently waiting for the next move from the Fed, while the New Zealand central bank has been intervening (successfully) to weaken the NZD. Earlier the Norwegian central bank intervened to strengthen the Krone, causing it to rise to its highest level in 3-weeks. We are still waiting to hear from the Norges bank about whether this signifies a policy to strengthen the Nokkie, but it highlights the divergent paths G10 central banks are taking, which is good news for volatility.

On the one hand you have those who want to normalise monetary policy (Fed, BOE), on the other you have those who want to loosen monetary policy (ECB/ BOJ), you have central banks who are intervening to weaken their currencies (RBNZ) and those intervening to strengthen their currencies (Norges Bank).

The good news is that this could signify the return of volatility to the FX market.