FTSE 100 Index Recovers
Financial Market Comments from Philip Gillet, Sales Trader, IG Index.
UK stocks continue their steady recovery in mid-morning trading, with the FTSE 100 up around 30 points.
The main factor for today’s lift was the strong finish to US trading yesterday, which ensured a positive start for the London session.
Miners are also enjoying another good day with the likes of Xstrata and Kazakhmys near the top of blue chip gainers.
This sector has been hit hard over the past couple of weeks with investors feeling that the hope of a sooner-than-expected global recovery was premature.
At the moment the mining sector sell-off is looking a little overdone and traders seem happy to bet on a further bounce-back from this sector over the next few days, which should help underpin the index.
In the short-term the positive momentum that has lifted the FTSE 100 from Monday’s lows near the 4200 mark is still intact. However it is difficult to see much of an extended recovery for the broader market.
There is scope for the FTSE 100 Index to extend the current recovery up above the 4300 mark, but it still looks like the negative sentiment that hit markets over the past couple of weeks could well stifle any run back to the May highs.
The worry is that the markets had got a bit ahead of the economic recovery over recent months.
A cautionary tone from the Bank of England, saying that financial institutions are not yet immune to further shocks, is unlikely to inspire a gung-ho attitude to risk among investors.
Looking ahead to the US session, at the moment we are expecting a slightly softer start for the Dow Jones index, currently trading down around 20 points from last night’s close.
Like the UK market this rally could have a bit further to run, but due to the way investor sentiment has shifted, it would be over optimistic to think we are going to see the highs from earlier this month tested any time soon.
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Good Luck!
DB
The above comments do not constitute investment advice Clean Financial accepts no responsibility for any use that may be made of them.
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