FTSE gains in Choppy Trade A Big Week Ahead

The FTSE 100 posted small gains on Monday in slow trade as investors eyed a big week ahead of economic data and company reports.

The FTSE 100 rallied 15pts by 10.30am in London, with the Index hitting 6169 yet trading was choppy as volumes lacked cut through.

Most of the early gains were weighted in the mining sector, which rallied 0.3% with the banks and oil sectors mostly flat. Tobacco and pharmaceutical stocks also posted some decent gains early on which shows some potential diversification of equity portfolios from risk weighted asset sectors to defensive stock sectors. This is a natural move having seen risk assets rally well since the start of the year and may not necessarily point to a change in investor mindset just yet.

The US markets are closed for Martin Luther King day and this means there is likely to be reduced trading volumes across Europe in the afternoon session. There is also a lack of economic data or corporate earnings out today so it is likely to be somewhat of a slow day in trading. The pace will quicken as the week progresses however.

Tomorrow will see the culmination of the Bank of Japan’s two day meeting, which is likely to see further easing measures announced. The Yen has weakened 16% against the US dollar since September last year. This is a significant amount and throws the concept of currency wars firmly back on the table after the announcement of consecutive and aggressive stimulus measures. A weak Yen helps to speed Japanese exports as it makes Japanese goods cheaper to buy for non Yen holders. This is where it is somewhat paradoxically in countries interests to have a weak currency. As industrial competitor nations follow suit in currency weakening exploits, this is where the currency wars starts to talk hold of forex moves.

On Wednesday, we see the minutes from the last Bank of England MPC meeting whilst on Friday, we have the fourth quarter GDP preliminary figure for the UK, which is expected to fall back into contraction territory by at least 0.1%. This would not put the UK into as triple-dip recession, as that would require two consecutive quarters of contraction.

Tomorrow’s German ZEW survey and US existing home sales are also worth a watch.

Corporate earnings out of the US continues in full flow this week. The historical darling of the US corporate calendar, Apple, reports on Wednesday after the US closing bell. Given the fact that Apple shares recently dipped below the $500 mark last week for the first time since February 2012, these earnings will play a crucial role in whether bargain hunters are to be convinced to buy back into Apple’s shares in the near term.