A strong start for commodity stocks comes amid strengthening copper, iron ore, and gold prices. Meanwhile, a disappointing set of retail sales figures should be put in the context of shifting shopping habits.
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FTSE flat despite commodity stock strength
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UK retail sales figures affected by shifting shopping habits
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US shutdown could be on the cards
The FTSE has remained somewhat flat at the open, amid a largely bullish introduction to the day for European stocks. The recent deterioration in commodity prices seems to be abating, with the FTSE 100 helped supported by strong performances from the likes of Fresnillo, BHP Billiton and Rio Tinto amid a rebound for iron ore, copper, and gold.
A disappointing set of retail sales figures out of the UK has done little to dent the ascendancy of the pound, amid a week of upside for sterling. However, today’s figures should be taken with a pinch of salt, with the deterioration in December retail sales coming amid a shift in shopping trends, towards the black Friday/cyber Monday fuelled November rather than last minute pre-Christmas spending in December. Perhaps the most worrying element is the annualised figures, which has descended from a high of 7.4% in late 2016, to 1.4% little more than a year later.
Tensions are rising amid a potential government shutdown in the US, with the senate failing to even schedule a vote, let alone pass a vote to stave off another shutdown. Despite a proposition from the House to provide a stopgap solution, there is clear opposition from the Democrats in the Senate, with the immigration policy DACA at the centre of the fight. With an agreement needed by midnight, there is a real possibility that we will see a shutdown, helping drive the US dollar lower once more.
Ahead of the open we expect the Dow Jones to open 8 points higher, at 26,026.
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