European markets continue to wait for Catalonia news, while the FTSE 100 consolidates its gains.
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FTSE gets a boost as investors shun Europe
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IMF’s gloomy tone on UK ignored
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Fresh record US high fades as earnings loom
European markets have found it hard going all afternoon, thanks to the impending speech from the Catalan president, which may (or may not) open the door to a declaration of independence. As a result, the UK has found itself an unlikely beacon of calm, with both the big-cap and mid-cap indices making small gains. The winners on the FTSE 100 have been an agglomeration of banks, miners, consumer goods stocks and housebuilders, suggesting a sizeable move into UK equities in order to reduce exposure to the situation in Spain. If a declaration of independence comes, the ball will be well and truly in Madrid’s court, with all sorts of worrying scenarios playing out in the minds of investors as they wait to see what Carlos Puigdemont has to say. Even the IMF’s warning about weaker UK growth thanks to Brexit failed to dent the enthusiasm for UK equities, given that there is probably no one left in global markets who doesn’t think Brexit will prove to be a problem. ‘Tell me something we don’t know’, seemed to be the message investors were sending the IMF.
On Wall Street an early flowering of bullish momentum sent indices to new records, but this faded as some brave sellers poked their heads above the parapet. Upward momentum has unsurprisingly dried up as earnings season looms; in a few days’ time we’ll be much better-informed about the health of the stock market, so the day before earnings really get started is hardly the one to be chasing a market at all-time highs.
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