Sterling has fallen lower once more this morning with the currency trading down to the 1.22 handle against the US dollar - the lowest level since mid-January. The FTSE 100 is marginally higher on the day, trading up by 7 points, but remains below last week’s closing level.
External factors weigh on the FTSE
Stocks have continued their sluggish start to the week this morning with European bourses trading little changed following yesterday's declines. A combination of factors seem to be weighing on the markets at present with the reemergence of concerns surrounding Deutsche Bank (DE:DBKGn) and Donald Trump’s ability to act in a manner befitting high public office at the forefront of investors’ minds. When you throw in an abysmal data point for German factory orders this morning - the largest drop since 2009 - there is plenty of reasons that could be seen as a cause for concern. Having said that stocks remain close to their record highs and with a further show of confidence in the global economy expected from the Fed next week, with markets are expecting another rate hike, it would be premature to start making calls for an end to the current bull run. The recent trade appears more likely a pullback against the prevailing trend higher rather than the beginning of a correction.
Paddy Power drops on substantial merger costs
Despite the broader index being little changed their are some individual shares experiencing significant moves this morning with Paddy Power seeing its stock decline by around 5%. The Irish bookmaker has seen a spate of selling in its shares after announcing a loss of £5.7m despite the businesses earning £330m profit. The discrepancy between these figures is down to the costs associated with the merger of Paddy Power and Betfair in February of last year with the single biggest item being a £174.1m charge to account for the fall in value of some of the merged group’s assets. Standard Life (LON:SL) is also lower today following Monday’s rally with the market treating the merger with Aberdeen Asset Management with a little more caution than it did yesterday.
Concerns mount as UK house prices creep higher
The Halifax house price index returned to positive territory in February with a 0.1% increase month on month. Whilst on the face of it this may seem a pleasing development for the industry, the rise was smaller than expected and also included a downward revision to last month’s already disappointing reading, so on balance, the residing feeling will likely be one of more disappointment.
Despite widespread doom mongering in the aftermath of the EU referendum, house prices have held up fairly well with last month’s decline of 1.1% coming after a run of four consecutive increases. With the triggering of Article 50 seemingly imminent, the moment of truth for homebuilders seems to be approaching and with both Taylor Wimpey (LON:TW) and Barratt Developments (LON:BDEV) having recovered the bulk of the losses seen in the wake of the referendum, today’s data could sow more seeds of doubt in the minds of already nervous investors.