FTSE losses gather pace

The FTSE 100 is playing catch-up this morning, falling by over 1% in mid-morning trading, while the pound tops $1.30 following robust retail sales.

-       Indices see no let-up in selling
-       UK consumers keep flashing the cash
-       Ashtead retreats on Trump worries

After weeks of seemingly endless grind, we finally have plenty to talk about. What seemed like the makings of a small bounce in the FTSE 100 has rapidly fizzled out as the pound spikes above $1.30 thanks to a stellar batch of retail sales figures. Not only was the monthly number much stronger than expected, and the best since February last year, but last month’s 1.8% drop was also revised slightly higher. Maybe we won’t see too much of a consumer squeeze after all, while sterling bears now feel even less popular than Jeremy Corbyn. One of the big losers in London over the past two days has been Ashtead Group, which is down by more than 4% this morning, on rapidly diminishing expectations of a big US infrastructure boost. Such big beneficiaries of the Trump bounce over the past six months are ripe for some selling, but this should subside in due course. Ashtead was doing well before Trump, and it will do well even if he is forced into an early exit from the White House.

US futures are trying to clock up some early gains, and with options expiry tomorrow we could see some recovery over the next two sessions, particularly if the beleaguered White House can staunch the flow of bad news. The US dollar is worth watching in particular – having moved in a straight line for four sessions now a bigger bounce is due, if only into the weekend. Ahead of the open, we expect the Dow to start at 20,590, down 16 points from last night’s close.