FTSE Bounces After US Highs As US Shut Down Ends

As was broadly expected, the FTSE bounced on the open this morning, following a record session in the US overnight. The Dow surged over 140 points, whilst the S&P and the Nasdaq tagged on 0.8% and 1% respectively, all hitting unchartered territory. The rally took place after the Democrats and the Republicans passed the funding bill to end the US government shut down, 72 hours after it started.  

US earning season back under the spotlight 

Whilst the US government shutdown was never expected to last any significant amount of time, the passing of the stop gap spending bill allowed investors to return their focus back to earning season, which is now well under way. Today we see earnings from Protector & Gamble, Verizon and Johnson & Johnson, with big names Ford and Caterpillar still to come later in the week.

EasyJet flies into top spot 

Sticking with earnings, in UK corporate news, EasyJet flew into the top spot on the FTSE leader board. The low-cost carrier impressed with its results, jumping over 5% in early trading. Revenue increase at EasyJet comfortably hit double digits for the first quarter, up 14% to £1.14 billion. Meanwhile an industry indicator for revenue per seat increased a solid 6.6%, as easyJet continues to capitalise on its rival’s woes. The budget airline industry has been a tough place to be in recent quarters as evidenced by the demise of rivals Monarch and Air Berlin, however EasyJet shares have shot up 15% in the past 3 months as market conditions are set to improve.  

Eurozone sentiment in focus 

Over in Europe, sentiment indicators are could give the flagging euro a boost, with ZEW sentiment surveys due from Germany and the eurozone, in addition to eurozone consumer confidence later in the day. The EUR/USD is trading down 0.2% heading into the reading, with the recent rally looking exhausted, despite the IMF saying that it expects eurozone economic growth to be 0.3% higher than originally forecast, increasing 2.1% in 2018 and 2% in 2019. Sentiment is expected to be strong in the eurozone, a surprise on the upside could offer support to the EUR/USD although with the ECB monetary policy meeting in just two days, traders will remain cautious. Resistance is expected to be encountered at $1.2275 prior to $1.23. Meanwhile, immediate support for the pair can be seen at $1.22 with a stronger support in the region of $1.2165.

Join our live webinars for the latest analysis and trading ideas. Register now

GAIN Capital UK Limited (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.