In mid-morning trading the FTSE 100 is sharply lower once more, with Shire Pharmaceuticals providing the catalyst.
Any hope of today seeing a continuation of yesterday’s small gains was wiped out by the news that Shire’s deal with AbbVie was under threat of being undone. The news took around 30 points off the index, representing the majority of early losses, but the selling gathered pace as the morning continued. Fellow tax-inversion takeover target AstraZeneca was in retreat as well, but the 3.5% loss was as nothing to the 25% slump in Shire that wiped out all the gains made since mid-June. Astra’s deal looks equally uncertain now, since the loss of tax benefits will result in Pfizer lowering its price, diminishing the attractiveness of the deal to Astra shareholders. One spot of good news was the drop in the UK unemployment rate to a fresh post-crisis low. Even average earnings rose faster than expected and with inflation falling UK consumers can feel marginally more confident about the future. Sterling’s bounce on the news was short-lived however, with the impact of yesterday’s inflation data still weighing heavily.
The rush to buy up US Treasuries is still the driving force at present, while gains in US indices are still proving to be fleeting. Intel’s earnings helped to stabilise the situation late yesterday evening, but with Europe in full retreat again US stocks are unlikely to escape unscathed. Unguarded talk about QE4 is now doing the rounds, which is an indication of how nervous investors are rather than any actual indication that the Fed is moving in that direction. After five years, the economic recovery is still not self-sustaining, a fact that should be more worrying than any drop in oil prices or the fresh woes in the eurozone. Ahead of the open, we expect the Dow to start 18 points lower at 16,297.
Any hope of today seeing a continuation of yesterday’s small gains was wiped out by the news that Shire’s deal with AbbVie was under threat of being undone. The news took around 30 points off the index, representing the majority of early losses, but the selling gathered pace as the morning continued. Fellow tax-inversion takeover target AstraZeneca was in retreat as well, but the 3.5% loss was as nothing to the 25% slump in Shire that wiped out all the gains made since mid-June. Astra’s deal looks equally uncertain now, since the loss of tax benefits will result in Pfizer lowering its price, diminishing the attractiveness of the deal to Astra shareholders. One spot of good news was the drop in the UK unemployment rate to a fresh post-crisis low. Even average earnings rose faster than expected and with inflation falling UK consumers can feel marginally more confident about the future. Sterling’s bounce on the news was short-lived however, with the impact of yesterday’s inflation data still weighing heavily.
The rush to buy up US Treasuries is still the driving force at present, while gains in US indices are still proving to be fleeting. Intel’s earnings helped to stabilise the situation late yesterday evening, but with Europe in full retreat again US stocks are unlikely to escape unscathed. Unguarded talk about QE4 is now doing the rounds, which is an indication of how nervous investors are rather than any actual indication that the Fed is moving in that direction. After five years, the economic recovery is still not self-sustaining, a fact that should be more worrying than any drop in oil prices or the fresh woes in the eurozone. Ahead of the open, we expect the Dow to start 18 points lower at 16,297.
Recommended Content
Editors’ Picks
EUR/USD holds above 1.0700 ahead of key US data
EUR/USD trades in a tight range above 1.0700 in the early European session on Friday. The US Dollar struggles to gather strength ahead of key PCE Price Index data, the Fed's preferred gauge of inflation, and helps the pair hold its ground.
USD/JPY stays above 156.00 after BoJ Governor Ueda's comments
USD/JPY holds above 156.00 after surging above this level with the initial reaction to the Bank of Japan's decision to leave the policy settings unchanged. BoJ Governor said weak Yen was not impacting prices but added that they will watch FX developments closely.
Gold price oscillates in a range as the focus remains glued to the US PCE Price Index
Gold price struggles to attract any meaningful buyers amid the emergence of fresh USD buying. Bets that the Fed will keep rates higher for longer amid sticky inflation help revive the USD demand.
Sei Price Prediction: SEI is in the zone of interest after a 10% leap
Sei price has been in recovery mode for almost ten days now, following a fall of almost 65% beginning in mid-March. While the SEI bulls continue to show strength, the uptrend could prove premature as massive bearish sentiment hovers above the altcoin’s price.
US core PCE inflation set to signal firm price pressures as markets delay Federal Reserve rate cut bets
The core PCE Price Index, which excludes volatile food and energy prices, is seen as the more influential measure of inflation in terms of Fed positioning. The index is forecast to rise 0.3% on a monthly basis in March, matching February’s increase.