Investing.com UK - Financial Markets Worldwide
⚠ Q3 Earnings Alert! Plan early for this week’s stock reports with all key data in 1 placeSee list

FTSE 100 Will Struggle To Move Higher

ByThierry Laduguie
Published 04/06/2014, 08:00
UK100
-
US500
-

With the ECB meeting fast approaching and a possible bullish announcement tomorrow (some sort of stimulus to fight deflation) stock markets appears to have priced in the good news. Investors do not wait to invest on the day of the announcement, they take position well ahead of the announcement, so when the consensus is for some bullish news, they buy the rumour.

The thing is the S&P 500has rallied strongly on the rumour, now investors are probably thinking of taking money off the table, this is why we could see a sell off tomorrow (sell the fact) whatever the outcome. Meanwhile the FTSE 100 is weak and still trading below the high on 15 May. In the latest economic data US factory orders topped forecast but Chinese manufacturing PMI and Eurozone CPI were below estimates. The focus here is on two things: risk of deflation spreading in Europe (weak CPI and economic activity), and emerging markets weakness.

In a period of bullish sentiment what is bad news becomes good news. In the case of the economic data coming from Europe, if inflation is too low or economic activity is slowing investors will think "stimulus" and they will buy the bad news. We are in a period of bullish sentiment this is why the S&P is strong. Of course the FTSE is a better barometer of economic activity than the S&P this is why it is not as strong. Too many stocks in the FTSE 100 are exposed to emerging markets and Europe, if these two areas are slowing down the FTSE will struggle to move higher.

FTSE 100

Latest comments

Loading next article…
Install Our App
Risk Disclosure: Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.
© 2007-2024 - Fusion Media Limited. All Rights Reserved.