FTSE 100 opens lower on profit taking

The FTSE 100 opened lower in trading on Monday as traders continued to take stock of the aggressive stimulus measures announced by the US Federal Reserve last week which triggered new six month highs in European stock indices.

The FTSE 100 was trading at 5900, with a loss of 15pts as investors moved to lock in their gains after last week’s charge higher. The German DAX was trading down 12pts at 7399, whilst the CAC also saw losses of 16pts to trade at 3564.

There is a lack of economic data out in the morning session, with only the New York Empire State Manufacturing Survey to focus on in the afternoon, as such, investors appetite to build on positions bought in the markets last week on the back of central bank stimulus efforts is likely to be a key driver to today’s session. Last time around the NY State Manufacturing measures slipped into contraction territory for the first time since October 2011 and so a deeper reading this time around could be alarming. Yet with the Fed now starting to purchase $40bn worth of assets on a monthly basis and with no end in sight to these purchases, a negative reading may not be received too heartily by investors.

Traders also need to be mindful of profit taking by short term traders, looking toi crystallise their near term hefty gains after last weeks rally. A move to lock in profits has already started to weigh on Indices and so bull traders need to defend against this move, particularly if the weaker moves start to gain momentum. The optimistic traders however could use any price weakness as an opportunity to pick up more exposure to equities at cheaper levels.

An eye towards developments in Europe remains important given the damp squib meeting of European Finance Ministers in Cyprus at the end of last week. The meeting failed to see an agreement on the timetable needed for a banking union whilst it has also been speculated that there was squabbling over the terms countries would be required to agree to if they sought the injection of the euro zone’s bailout funds.

Sports Direct shares slipped 0.9% on news that the budget sports retailer was set to takeover rival JJB.