FTSE hits turbulence amid possible airline price war

The FTSE is suffering heavily this morning, with airlines providing a drag amid warnings of a price war. Meanwhile, the eurozone has seen its PMI figures drift lower, potentially justifying Draghi’s dovish rhetoric.

• Ryanair warns of potential airline price war

• IMF cuts UK growth forecast

• Eurozone PMIs prove that dovish Draghi could be worth believing

The FTSE has suffered a rude awakening to the new week, with the gains of last week clearly left in the rear-view mirror. One of the biggest drags we have seen has come from the airline sector, with Ryanair’s warning of a potential air fare war in the coming months leading to sharp falls for easyJet and IAG, the owner of airlines including British Airways, Iberia and Aer Lingus.

This morning the IMF cut its growth forecast for the UK for the first time since the EU referendum over a year ago. Chief amongst its concerns is the tepid economic performance seen in the first quarter of 2017, with the enactment of Article 50 coinciding with a deterioration in both business and consumer confidence.

A host of eurozone PMI surveys have somewhat undermined the recent theme of mainland European strength, with readings across France, Germany and the entire eurozone proving somewhat underwhelming. Crucially, coming off the back of an ECB meeting where the markets failed to believe Draghi’s dovish rhetoric, we are seeing a picture of weakening economic data support the fact that we may actually have longer to wait for the hawks to gain control in Frankfurt. With the appreciation of the euro dragging inflation expectations lower, we are also seeing eurozone exporters suffer in an environment of cheaper imports and more expensive exports.

Ahead of the open we expect the Dow Jones to open 36 points lower, at 21,544.