FTSE 100 dips as sterling rallies and investors await big tech earnings
The FTSE 100 fell on Wednesday as sterling rallied amid US stimulus speculation and investors eyed a busy day of tech earnings on Wall Street.
London’s blue-chip index is down 2.2 per cent to 6,539 points while the more domestically-focused FTSE 250 was trading flat.
Boris Johnson confirmed the third lockdown would continue until 8 March at the earliest in an address to the House of Commons which sent the index down further this afternoon.
The strength of cable – at its highest level for close to 33 months – is also pulling the FTSE down.
Against the euro a 0.2 per cent rise has lifted sterling to an eight and a half month peak.
Across Europe markets opened lower with Germany’s Dax down 2.7 per cent and France’s Cac dipping 2.2 per cent. The pan-European Stoxx 600 opened 1.9 per cent lower.
The FTSE had remained resilient through Tuesday despite the unemployment figures making for grim reading. But news that the UK had passed 100,000 deaths will have done little to market sentiment this morning.
“In the UK, markets are also being hamstrung by the slowing momentum, with a lack of obvious near-term positive catalysts combining with the resilience of sterling to crimp gains in the major index,” Richard Hunter, head of markets at Interactive Investor said.
Investors will be looking across the Atlantic for some glimmer of hope in a busy day for tech earnings but Connor Campbell, Spreadex’s financial analyst predicts a “frustratingly mixed session” as it will happen after market close.
US stocks await big tech earnings
Wall Street opened lower on Wednesday as investors readied themselves for a swathe of tech earnings including Facebook and Apple.
It comes off the back of Microsoft’s better-than-expected results on Tuesday as sales rose 17 per cent last quarter and its cloud division grew 50 per cent. Its shares jumped four per cent after hours.
The drama unfolding on Reddit’s Wall Streets Bets thread is ramping up again today. Gamestop shares have soared more than 300 per cent as day traders continue to pile into the shorted stock.
Reports suggest the hedge fund Melvin Capital has closed out its position in the bricks-and-mortar videogame retailer.
Reddit investors are now targeting other shorted stocks including AMC Cinema, which has jumped nearly 200 per cent. Trading has now been halted in AMC shares.
Today’s other big highlight will be the first Fed meeting of the year. It is not expected to change its monetary policy decision and will maintain its near-zero interest rates.
“The big question will be over any timetable for tapering asset purchases, but Powell is likely to adopt a dovish tone on this, and reiterate that it’s premature to contemplate this given the challenging near-term outlook and remaining uncertainties,” Jim Reid, Deutsche Bank’s research strategist said.