Market Insights

In mid-morning trading the FTSE 100 is down 20 points, once again underperforming against its European market peers.

With the quarter end upon us it is not surprising to see a general air of indecision envelop markets like a late-winter fog. Yesterday’s bounce higher was a part of this pattern too, while the usual trade balancing that goes on is bound to obscure the news that China is shifting policy in a noticeable fashion towards a looser setting. The market was evidently hoping for more, with a disappointed reaction in London-listed mining stocks underscoring the lack of enthusiasm. However, further down the list the FTSE 250 was able to post half-decent gains thanks to an upward revision in UK GDP data, although the record-high deficit in the nation’s current account meant that sterling failed to join in the admittedly muted celebrations. The stock market does love a good turnaround plan, a point underlined by the enthusiastic reaction to Kingfisher’s figures this morning. A radical shift in store brands helped to gloss over a 15% fall in pre-tax profit, and with the promise of more to come CEO Veronique Laury looks to have the market on her side. Meanwhile Thomas Cook announced it was still on course to hit forecasts, but this good news was diluted by a drop in average prices, signalling that the firm will have to work harder just to maintain its current trading performance.

A steady drumbeat of US data and FOMC member speeches should ensure that the market’s attention is firmly on the US this afternoon. Yesterday’s recovery restores some of the optimistic outlook, but the US dollar is waking from its slumber once more and this will make life harder for indices on Wall Street to follow their European cousins higher. Ahead of the open, we expect the Dow to start 70 points lower at 17,906.