The FTSE fell for its third consecutive day on Wednesday, dropping 0.5% to 7718. Poor corporate updates from Burberry (LON:BRBY) and Pearson (LON:PSON), in addition to weaker oil prices weighing on energy stocks, made sure the FTSE remained on the back foot.
Burberry plummeted on Wednesday, to finish to session 8% lower, after reporting a 2% decline in retail revenues. Retail revenue for the three months to 31 December was £719 million, down from £735 million the same period a year earlier.
The spotlight has been on retailers since the start of the year. Concerns over the health of the UK high street and retail sales have been rife over this recent period, as consumers adjust to higher prices and lower wages in real terms during the crucial Christmas period. Burberry’s figures will have done little to calm those nerves. Investors will now look ahead to Friday’s retail sales results for a clearer picture of consumer spending.
Earnings overshadow US government shutdown fears
Whilst Europe continues in the doldrums, US equity indices were on the front foot again as trading kicked off on Wednesday. Despite the roller-coaster session yesterday, which saw the Dow drop 280 plus points, investors were keen to jump back in again, pushing the index up 100 points on the open.
Impressive earnings by Bank of America (NYSE:BAC) and Goldman Sachs (NYSE:GS) stole the spotlight, overshadowing any concerns over a potential US government shutdown at the end of the week. The fears over the shutdown displayed by market in the previous session, appear well a truly behind it.
There haven’t been any major developments, but putting the risk into perspective, the chances are that the can will be kicked down the road once again, leaving investors to focus on earning season.
Bitcoin dives for another day
Bitcoin, meanwhile, has not enjoyed the same fortunes as the Dow and the selloff in cryptocurrencies continues for a second day. The previous session saw Bitcoin tumble 20%, booking its biggest one-day fall.
The recent panic selling of the cryptocurrencies continues to be attributed to the concerns over a regulatory clampdown in South Korea and China, two of the regions where bitcoin is most heavily traded. Contrary to what the disbelievers say, the recent heavy falls do not necessarily mean the end for bitcoin. $10,000 continues to offer support to the currency for the time being.
However, it is becoming more obvious that the recent burst higher at the end of last year was speculative hot air, the danger is that those who assumed that there was a quick buck to be made, will now be looking to sell out, which could add more selling pressure. This could then finally allow the price to stabilise to then grow at a more contained pace.
Disclaimer: The information and opinions in this report are for general information use only and are not intended as an offer or solicitation with respect to the purchase or sale of any currency or CFD contract. All opinions and information contained in this report are subject to change without notice. This report has been prepared without regard to the specific investment objectives, financial situation and needs of any particular recipient.
Any references to historical price movements or levels is informational based on our analysis and we do not represent or warrant that any such movements or levels are likely to reoccur in the future. While the information contained herein was obtained from sources believed to be reliable, the author does not guarantee its accuracy or completeness, nor does the author assume any liability for any direct, indirect or consequential loss that may result from the reliance by any person upon any such information or opinions.