Morning market commentary
The shocking collapse of Carillion (LON:CLLN), whose shares have been suspended since the company announced it was going into liquidation, appeared to pull the FTSE back from its all-time highs this Monday.
The knock in confidence to the UK economy – Carillion employs around 20,000 people, and utilises a huge network of smaller subcontractors – likely contributed to the FTSE’s 0.1% dip, a move that took the index to just below 7775 having grazed 7800 last Friday. The banking sector is one of the key weights dragging on the index, with investors perhaps concerned about the money owed by Carillion to the likes of RBS (LON:RBS) and HSBC (LON:HSBA).
The pound was a bit less bothered, basically maintaining the same kind of trading seen at the tail end of last week. Against the dollar it nudged 0.2% higher to a fresh post-Brexit referendum peak, while slipping 0.2% against the euro, where it’s holding a smudge above €1.1255.
To be fair to the FTSE and pound, things weren’t much more exciting in the eurozone. The euro is continuing to dominate the forex markets, keeping sterling at bay while climbing to a brand new, $1.221-crossing 3 year high against the dollar. This, of course, upset the DAX’s exporters, dragging the German index 0.2% lower (the CAC was more sanguine, sitting flat the right side of 5500).
Given that today’s Martin Luther King Day, meaning there’s no chance of an energy-injection from the US, trading may remain relatively subdued, especially with the Carillion crisis casting a shadow over the UK economy.
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