FTSE set for weekly decline
|Despite rallying to a 6-month high on Tuesday, the FTSE is set to end lower for a second successive week as the benchmark continues to wrestle with some resistance around the 7450-7500 mark. In the FX space it’s been a pretty mixed week on the whole for the pound, although a further appreciation in the greenback has sent the GBP/USD rate to its lowest level since February around the $1.29 handle.
The FTSE has pulled back from a 6-month high this week and the region below 7550 continues to attract sellers. Source: xStation
RBS slumps as profits fall
The worst performing blue-chip in London this morning is RBS, with shares in the bank falling more than 4% as it reported a drop in profits and reiterated its Brexit warning. While profits for the first quarter fell to £707M, this was actually better than consensus forecasts of around £546M, but weak revenues and forward guidance that could be described as cautious at best have caused the adverse reaction. Revenues of £3B were flat on the year, but lower than the £3.3B predicted and comments from RBS that this is unlikely to improve imply are not what investors wanted to hear. With the government still owning a 62% stake in RBS, the news isn’t good for public finances and with CEO Ross Mcewan announcing just a day before that he is stepping down there’s heightened levels of uncertainty around the stock going forward - and that’s without even looking at potential impacts from Brexit!
US growth figures in focus
The main scheduled event for the market before the week is out comes from the US this afternoon, with the world’s largest economy set to announce their latest growth figures. GDP releases suffer from sizable lags in terms of their release and are prone to numerous revisions but nonetheless they can move markets. An expected annualised pace of growth for the first quarter of the year at 2.1% is pretty good compared to most of its peers, and a reading around this level or higher would provide further evidence of the relative outperformance of the US and further support the US dollar which hit its highest level in almost two years this week. Stock markets could also be watching this release closely and after a strong start to the week risk sentiment has waned somewhat as we come to the end of what is traditionally the best 6-month period for equities recognised by the “sell-in-May” trading adage.
Information on these pages contains forward-looking statements that involve risks and uncertainties. Markets and instruments profiled on this page are for informational purposes only and should not in any way come across as a recommendation to buy or sell in these assets. You should do your own thorough research before making any investment decisions. FXStreet does not in any way guarantee that this information is free from mistakes, errors, or material misstatements. It also does not guarantee that this information is of a timely nature. Investing in Open Markets involves a great deal of risk, including the loss of all or a portion of your investment, as well as emotional distress. All risks, losses and costs associated with investing, including total loss of principal, are your responsibility. The views and opinions expressed in this article are those of the authors and do not necessarily reflect the official policy or position of FXStreet nor its advertisers.