US equity markets put in a mixed performance on Tuesday despite outperformance from the Energy sector, with the Dow Jones index closing lower on account of continued weakness from names at risk of Trump legislation inaction (Healthcare, Financials). Meanwhile, the S&P500 edged higher as aforementioned Energy names led four other sectors higher, while the Tech-focused Nasdaq once again outperformed its peers, up 0.4%.
After its wobble last week, the FTSE is now once again eyeing 7400, needing to add just 25 points to re-cross that level for the first time in 9 days. To break that barrier, however, it needs to find some momentum, with the economic and earnings calendars today looking unlikely to provide the requisite boost.
Spreadex Analyst Connor Campbell noted – “That energy could come from the pound or, more accurately, if the pound falls any further as the day progresses. Sterling couldn’t make up its mind for much of Wednesday, flitting from green to red as Theresa May triggered Article 50; it eventually ended up at a mild loss, a trend that has continued into this morning. The currency now finds it just above 1.24 against the dollar, down a cent and a half from where it closed on Monday, while against the euro it is holding at the top end of the week’s trading bracket despite a 0.1% decline.”
However, ADS Securities Analyst, Konstantinos Anthis suggested it may be worth keeping a close eye on the Pound over the coming weeks – “Now that Brexit Wednesday has come and passed without incident, an interesting scenario has been circulating around the major trading desks that involves the UK currency rallying to the upside in the coming few weeks. According to this chatter, there appears to be scope for the Pound to climb higher as market participants hold a record number of speculative short positions on the UK currency.”
In focus today will be evolution of the UK’s Article 50 triggering, as both sides set themselves up for two long years of negotiations.
Accendo Markets Analyst, Mike van Dulken commented – “After all the fuss about the UK triggering Article 50 yesterday, and opposition to PM May’s attempt to link a trade deal with security, focus has reverted to central bank policy outlook. This after media reports the ECB is concerned about misinterpretation of its last message – not hawkish it says – and how it is now reluctant to change its message end-April for fear of adding fuel to the fires of misunderstanding”