The FTSE extended gains from the previous session in early trade, supported by a positive session in Asia overnight and Wall Street clawing back steep initial losses. The Dow closed 14 points lower, sliding for a 7th straight session as concerns over rising bond yields dampened appetite for equities.
The Nasdaq also closed in negative territory down 0.25% as tech stocks were out of favour ahead of Google parent Alphabet reporting after the bell.
Alphabet reported a 73% increase in revenue, thanks mainly to a substantial increase in advertising revenue; however, this was insufficient to offset a surge in costs, which left operating margin lower in the first quarter.Anglo warns on hit to profits
Anglo American dropped 0.9% in early trade as investors reacted to warnings of a hit to profits following a suspension of operations in Minas Rio.
Anglo advised that 2018 earnings could be $300 million - £400 million lower, worse than initially thought, with activity not expected to ramp up again until Q4.
The markets reaction so far seems relatively tame given that this is one Anglo’s biggest growth project.
However the blow is being softened by rallying commodity prices which helped Anglo achieve revenues of $8.8 billion across last year.
Paddy Power sinks on fears of £2 machine maximum
Paddy Power fell to the bottom of the FTSE as investors fretted over the possible slashing of maximum fixed bet odds at terminals.
The current maximum is £100, yet with Chancellor Philip Hammond favouring a cut to just £2.
Whilst the plan is to protect customers from the machines which have been earmarked as encouraging gambling addition, it could hit bookies’ profits hard. Paddy Power is down 2.8% in early trading.
GBP/USD holding ground
High US treasury yields kept the dollar elevated overnight. GBP/USD hit a 5 week low of $1.3918, however with yields easing in early trade the dollar has also softened slightly this morning.
Yet with no high impacting U.K. economic data due to be released until tomorrow, the pound could struggle to capitalise on the dollar weakness.
EUR/USD back below $1.22 on weak IFO sentiment data
EUR/USD also struck a 7.5 week low overnight, down at $1.2185, before rising on the weaker dollar back past $1.22.
The move higher for the euro was short lived as a downbeat IFO sentiment report sapped demand for the common currency pulling it back below $1.22. EUR/USD could find itself more supported this afternoon on the release of US consumer confidence data.
Confidence is expected to have eased again in April, after declining in March from February’s 18 year high. This, combined with an easing in yields could bolster EUR/USD.
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.