FTSE falls 0.3% as miners and banks weigh

<p>The FTSE fell for a second consecutive session, weighed down by a weaker performance in heavyweight miners and banking stocks, despite the Bank of England’s […]</p>

The FTSE fell for a second consecutive session, weighed down by a weaker performance in heavyweight miners and banking stocks, despite the Bank of England’s latest MPC minutes indicating that two committee members wanted to see an additional £75billion in asset purchases announced as opposed to the majority agreed £50billion.

The FTSE 100 fell 22 points or 0.37% by mid morning, with similar losses seen in French trade, though German stocks fell the most in Europe, with the DAX losing 0.8%.

There is not perhaps too much to read into today’s weaker session apart from traders going through the motions of risk on, risk off and profit taking. We still have global indices at crucial levels, with the Dow Jones temporarily trading above the psychologically important 13,000 level last night, and the FTSE nearing the equally important 6000 level. Should the last two sessions of losses not provide enough of a platform for investor buying to re-emerge, we could start to see a mini price correction, though a correction could of course be healthy to maintain a longer term upward trend.

With Greece’s bailout confirmed, though admittedly last minute potential hitch’s remain, the focus for investors returns to global growth prospects. Flash manufacturing data out of China showed the measure picked up but remained in contraction territory, and this, on the back of January’s first fall in imports and exports for more than two years, Chinese growth remains a crucial focal point for global stock markets and particularly European markets, considering its place as a major export partner of China.

Economic data disappoints
With focus switching to global growth, economic data is in most investor headlights and weaker than expected German and Eurozone manufacturing data out this morning has also aided the sell off in stocks somewhat. German flash PMI fell more sharply than expected, to 50.1 from 51 when a growth to 51.5 was expected by most. Equally Eurozone flash PMI also missed consensus, hitting 49.0 when a reading of 49.5 was expected and the important services sector section of the PMI fell in contraction territory of 49.4 when a marginal growth was expected. A surprising 1.9% jump in Eurozone industrial orders however helped to calm much of the manufacturing disappointment.

Market volumes remain low 
Volumes remain rather thin in trading, emphasising the fact that risk appetite has dissipated somewhat but we can take positives from the fact that the lack of trading volumes has not conspired to send stock markets sharply lower. It could be healthier for stock markets in the long term that investors are happy to sit on the sidelines and wait for economic data to improve before buying more aggressively back into stocks, than downsizing their positions aggressively.

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