The FTSE 100 is in the red this morning, moving below yesterday’s low and fast approaching the lowest level seen since early April. After the closure for Monday’s bank holiday, trading resumed yesterday with the bears taking the upper hand in mining stocks, which were pummeled following a survey showing a 14th consecutive month of contraction in activity for Chinese factories.
Sell in May?
The recent concerns surrounding the Chinese economy and sharp-selling seen in the miners come at a time that is traditionally viewed as seasonally weak for the stock market. These fears had subsided some what in recent months after being at the forefront of investors’ minds in the early part of the year, but the recent re-emergence coupled with the age-old maxim of ‘sell in May and go away’ could be enough to cause some market jitters in the short-term. BHP Billiton has the dubious honour of leading the losers for the UK blue-chip index, with fellow Miners Anglo American and Rio Tinto also deep in negative territory.
Retail woes continue, look who’s Next
Following the recent well-publicised troubles faced by retailers on the British high street like BHS and Austin Reed, clothing company Next have cut their sales and profit forecasts - further highlighting the challenges currently faced by the sector. The FTSE-listed firm rolled out the favourite excuse amongst retailers of blaming the weather, but it appears there is more than a tepid spring so far to blame for the cooling off in sales. Shares touched their lowest level of the past 52 weeks this morning following the release, but have recovered fairly well since and trade more than 4% off the lows at the time of writing.
Sterling slips on construction PMI miss
UK construction PMI data for April came in below expectations this morning, showing the pace of growth slowing to its lowest level in over two years. This weakness has seen some further selling in the Pound this morning with the GBPUSD exchange rate moving back below 1.45 after a sharp reversal from it’s highest level in over a year yesterday. Tomorrow morning the services PMI will be closely watched, as the majority of data of late has disappointed and another miss could see a sustained move lower for Sterling.
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