FTSE falters after false break higher

The FTSE 100 has seen further weakness today after an attempt last week to move out of its recent range to the upside was met with a firm rejection. The pound has begun the week fairly mixed overall although it is rising against the US dollar and Euro - its two most widely traded crosses.

Eurozone manufacturing misses forecasts

The latest survey of purchasing managers on the continent has revealed a slightly less positive outlook on the economy than was expected. Whilst a European flash manufacturing PMI reading of 56.8 is one of the strongest in recent years and considerably higher than the 50 level which denotes the line in the sand between expansion and contraction, it is lower than both the previous month and the consensus estimate. This economic indicator for the Eurozone had been consistently impressive of late with 9 of the past 10 releases beating expectations, so, against this backdrop, it is fair to say this morning's miss is something of a disappointment.

Weakness persists in European bourses

After a strong move higher last week the Euro has seen some selling since the data release but on its own this shouldn't be enough of a blow to cause a reversal to the recent uptrend. The rise in the single currency began in earnest following the 1st round of the French elections, when Macron's performance laid to rest fears of an imminent break up of the union, and the Euro has remained markedly higher against both the US dollar and the pound since. However, the same cannot be said for the leading stock indices in Europe with the German Dax falling to a 3 month low this morning and currently trading only marginally above where it was prior to the historic vote in France. The price action is similar for stock markets in Paris, Madrid and Milan with the majority of the strong gains seen since Macron's progression to the final round now having been handed back.

IMF downgraded UK growth forecast

The FTSE 100 is trading lower by more than 60 points this morning with the attempted move higher towards the end of last week now appearing to be a false breakout. After riding higher on the coattails of its European peers following the favourable outcome of the French election the FTSE has outperformed continental bourses in recent weeks and with US stocks setting record highs recently the FTSE is caught in the middle somewhat. As well as the weakness coming from across the channel, the FTSE has also been hit by news of a 0.3% downgrade to the IMF forecast for UK GDP growth this year with a rise of 1.7% now expected. In terms of individual stocks Provident Financial is leading the losers with the stock currently off by a little more than 4%. Increased competition and the growing possibility of price wars has seen airline stocks slump with easyJet and BA parent company International Consolidated Airlines both experiencing a sizable drop in their stock of around 2.5%.