EU markets trade positive on Friday – FTSE halted due to technical glitch at LSE. UK GDP deteriorates further

<p>European investors bought back into equities on Friday, continuing a theme that started on Thursday afternoon, helping to lift the DAX and CAC Indices higher […]</p>

European investors bought back into equities on Friday, continuing a theme that started on Thursday afternoon, helping to lift the DAX and CAC Indices higher by 0.3% in early trading on Friday. However a technical glitch halted trading on the FTSE 100, causing another blow in sentiment to the LSE.

UK GDP revised lower
In a blow to the UK economic recovery, UK Q4 GDP was revised lower to a contraction of -0.6%, going some way to threaten expectations of an interest rate hike in May. We have seen investors come on to buy the pound sterling on expectations that the Bank of England will hike interest rates potentially as early as May. Today’s downward revision throws a spanner to those works and puts the Bank of England into an even more difficult position.

That said, much of the contraction is a direct reference to the weather problems experienced during the crucial christmas period and so this revised reading should be taken with a pinch of salt.

In reaction to the GDP revision we saw traders sell out of sterling, which subsequently fell against both the US dollar and Euro.

FTSE halted due to LSE glitch
FTSE traders however will be venting fury at the LSE this morning as a technical glitch halted trading on the UK exchange. It’s yet another glitch to trading and traders, who still remember the same issues that halted trading for some 3 hours in 2009, will undoubtedly be venting fury this morning at the LSE. At a time of uncertainty in the markets, where traders are having to keep on their toes with the situation in Libya, the last thing they need is an unexpected halt to trading.

Traders maintain a close eye on the situation in Libya, but with OPEC and Saudi Arabia seemingly willing to fill any supply gap, tensions have taken a small step towards calm today. The FTSE Volatility Index has also seen its first drop for days, falling 7.8% having rallied over 50% in the last week and so whilst the nervousness in the market has not dissipated, traders could well start to eye what they may perceive as bargains stock picks with prices having having fallen so much. This will be very important should the FTSE (when the LSE glitch is fixed) and wider European Indices stage a recovery from recent losses.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.