FTSE fails to follow bullish global lead

The FTSE isn’t following Asian and US markets higher, with a disappointing performance from the miners dragging the index lower. Meanwhile, with the FOMC meeting minutes due up later today, the focus will turn to inflation prospects.

  • FTSE underperforms as miners drag index lower

  • UK construction PMI disappoints, as eyes turn to services figure

  • FOMC minutes promise focus on inflation reaction

The FTSE has continued to flounder on the second trading day of 2018, even though the US, Asian, and mainland European markets have pushed higher. The disappointing UK construction PMI forms the second disappointing UK PMI survey is as many days, with the pound drifting marginally lower as a result. Unfortunately, the weaker pound has done little to help the FTSE, which has been dragged lower thanks to yet another poor showing from the miners thanks to ripples in the recent gold and copper resurgence story. The UK services PMI reading is due on Thursday morning, and a third disappointing survey would provide yet another reason to sell the pound.

The US Federal Reserve is back in focus later, with the release of the December FOMC minutes providing us with further clues as to where US interest rates will move in 2018. Current market expectations point towards a 50 basis point rise for 2018, with a 75% chance of a March rate hike. Given the recent rise in commodity prices, the 2017 dollar decline, and successful passing of tax reforms, there is likely to be an increased focus on the prospect of resurgent inflation in the US. Markets will be keeping a close eye on the likely response from the FOMC should such a rise occur.

Ahead of the open we expect the Dow Jones to open 22 points higher, at 24,846.

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