Concerns over the health of the global economy continued to weigh on sentiment dragging European bourses and Wall Street southwards.
Worries over the economic outlook had been building following a surprisingly dovish Fed, last week. These fears were stoked on Friday following poor European output data and the inversion of the US yield curve for the first time in over a decade.The yield of the 3-month treasury topping its 10-year counterpart is often considered a warning for a recession. The last time this happened was pre the financial crisis in 2007. With recession warnings sounding, demand for risker assets has fallen sharply.
The FTSE fell harder than its European counterparts, thanks in part to the stronger pound on Brexit optimism. Later in the day Theresa May dragged the pound lower boosting the FTSE. As the pound continues to dance to the tune of Brexit, the FTSE experiences heightened volatility.
Fresnillo topped the FTSE gainers board supported by the soaring price of gold on safe haven flows.
Despite today’s sell off, the FTSE remains above support at 7150 a level that was tested twice earlier in the session. A move lower could see 7075 tested. As long as we don’t see a break below 7075 then there is a good chance that the FTSE could move higher.
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