FTSE lower despite positive close in US and Asia

Despite a positive close on Wall Street and an impressive performance in Asia overnight, the FTSE opened lower and is trading some 02% lower in the first hour of trading.  

The Dow and the S&P managed a positive close overnight after comments from St Louis Fed President Bullard, expressed concerns over raising interest rates too fast. His comments served to pull yields lower, boosting the US indices, and pulling the dollar lower. 

However, by the end of the session the effects o f his comments were wearing off leaving the Dow & S&P to close significantly lower than the session high. Meanwhile the Nasdaq clocked up its fourth straight losing session.  

RBS 4% lower despite returning to profit 

Disappointing earnings were a big factor driving trading on the FTSE early on Friday. Investors proved that they are not easy to please, sending RBS over 4% lower, despite reporting a return to profit for the first time since before the financial crisis almost a decade ago. 

RBS announced profits of £752 million compared with the £6.9 billion loss the previous year, in what was appropriately described as a symbolic moment for Chief Executive Ross McEwan. The profits were slightly less than forecast and doubts still linger over the future health of the troubled lender. 

The 10 years turning this bank around have been a hard slog. However, the problems by no means end here for the RBS, as errors from the past continue to haunt them. 

The bank set aside an additional £492 for litigation in the US taking the total to £3.2 billion set aside for court action over the mis-selling of mortgage backed securities. Furthermore, and more recently RBS was handed a report laying bare the mistreatment of small business as the bank.  

EZ CPI in focus 

In the forex markets the dollar is seen advancing once more, putting pressure on EUR/USD ahead of the CPI read later the morning. Sluggish inflation is still causing sufficient concern at the ECB for monetary policy makers to consider it premature to change the forward guidance. 

Inflation is expected to be -0.9% month on month, down from 0.4% in December. Meanwhile on an annual basis a print of 1.3% is forecast, down from 1.4% in December. 

Any signs of a further softening in inflation could push back expectations of the ECB tweaking forward guidance in March, which could weigh heavily on the euro, especially in the face of dollar strength. EUR/USD is currently trading 0.1% lower on the day. A weak reading at 12:30 GMT could see the pair slip back through $1.23.