The FTSE dropped 37 points in early trading this morning following yesterday’s close on Wall Street and overnight losses in Asia.
“Both BP and Shell dropped 0.7-0.8% after the bell” commented Spreadex Analyst Connor Campbell, “effectively giving back all of yesterday’s rebound. The miners were also in a bad mood, leading the FTSE to open 30 points lower, the index once again straining to keep its head above 7400.”
“Over in the Eurozone the DAX and CAC where is a similarly negative mood to the FTSE, plunging 0.8% and 0.7% respectively.” added Connor Campbell. “A large part of that decline stems from the euro’s recent surge against the dollar”
Yesterday’s surprising comments by Mario Draghi about a potential cutback in the European stimulus programme caused the euro to rally to a nine month high against the dollar.
However, ADS Securities Analyst, Konstantinos Anthis, sounded a note of caution “The ECB President’s attributing of sluggish inflation to the low energy prices, mainly Oil’s price at the moment, we believe poses a potential risk.”
“Production and demand-related factors are expected to keep oil prices low for an extended period of time and Draghi might have to wait until he sees substantial progress on the inflation front, before he acts.”
“Nevertheless, the Euro remains a buy due to the improving conditions in the Euro area and the uncertainty surrounding the UK and the lack of positive US data.”
US equity markets fell across the board on Tuesday. Accendo Markets Analyst Mike van Dulken noted “investors reacted to the latest delay for Trump’s Healthcare reform bill, now not expected to be voted on until after the 4 July recess, while large cap Tech stocks took another leg lower.”
“Declines for Amazon, Facebook and Netflix following the EU’s record €2.4bn fine for Alphabet saw the Tech-focused Nasdaq underperform, while the equivalent sectors on the S&P500 and Dow Jones also weighed, offsetting strength in Financials.”
