The FTSE edged away from its record closing high, in an uninspiring session ahead of the weekend. It is, however, still firmly on track for another winning week. This is its eigth consecutive winning week as low for longer interest rates, a weaker pound and stronger oil prices have kept the bulls firmly in control.
Glencore (LON:GLEN) tumbled to the bottom of the index as reports of a UK bribery probe over its dealings in Congo. The uncertainty of how this fraud investigation could turn out is providing investors with the perfect excuse to book profits from Glencore’s 15% rally over the past two weeks and 40% rally over the past year. The adage there is no smoke without fire more often than not stands true, therefore it is understandable that investors want out, until there is more clarity over the situation.
AstraZeneca (LON:AZN) tumbled over 2% after core earnings missed forecast hit by a combination of rising costs and falling sales of its cholesterol fighter. Despite the disappointment, losses were limited after the drugs maker reiterated its promise to return to sales growth in 2018.
Pound targets fresh 5 month lows
The pound was trading lower versus the dollar once again on Friday, as it heads towards fresh 5-month lows. Whilst a run of soft UK economic data, a dovish BoE and growing concerns over the future health of the UK labour market has been weighing on demand for the pound over the past month, the negative sentiment intensified this week by the return of Brexit fears and an ever-stronger US dollar. With the UK economic calendar quiet for the first part of next week, investors will need to wait until Wednesday’s inflation data for any hope of a meaningful change in direction for the battered pound.
Euro Marginally lower and FTSE MIB plummets on Italy’s populist coalition
The arrival of a populist government to Italy, sent the euro southwards before it, bounced off support at $1.1750. Given that the two parties have toned down some of the Eurosceptic rhetoric, the sell off has not been so marked, instead the 5 Star and the League will increase focus on stepping up immigrations curbs and turn more towards Russia in foreign policy.
Whilst the euro was only down marginally albeit still hovering around 5-month lows, on the announcement of a 5 Star / League functioning government; the FTSE MIB, has dumped over 1.6% on the news. This suggest that right now euro traders are not overly concerned, whereas the populist coalition is not being viewed in a positive light for the domestic economy.
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