The FTSE is down 8 points in early trading this morning, with a fairly flat opening following yesterday’s Japanese General Election and the political events unfolding in Spain.
GKN is the morning’s best FTSE performer. The share price is up 3% in early trading following last week’s profits warning as investors warm to the idea that the Engineering Group now represents value.
On the Japan General Election, FxPro analyst, Edward Anderson suggested “Japanese Prime Minister Shinzo Abe’s party has won a resounding, albeit not surprising, victory in Japan’s election on Sunday. The markets initially reacted with Japanese equities climbing higher, whilst JPY declined.”
“However, as we enter the European trading session, the markets are behaving with a “business as usual approach” which has resulted in the Japan225 and USDJPY both retracing from earlier highs.”
Meanwhile, the Euro lost ground over the weekend as investors braced for Spain’s Senate expected approval of Prime Minister Rajoy’s call to impose direct rule on Catalonia. Edward Anderson added “The markets are concerned as to the economic fallout that may occur as Catalonia contributes over 20% to Spain’s economy and how this will affect the greater Eurozone.”
The Euro will be the main focus of the week with the European Central Bank ready to taper its asset purchase program, with investors eager to find out how aggressive Mario Draghi and his fellow policymakers are intending to be. ADS Securities analyst, Konstantinos Anthis commented “The debate is whether the central bank will opt for a full scale tapering operation where they would significantly reduce their asset purchases or whether they will prefer to reduce stimulus by a measured amount at this stage and leave their options open for the future.”
“The euro should trade with a positive bias towards Thursday’s meeting even though the Catalan issue remains on the forefront as traders seem to regard this as a regional dispute rather than a risk to Eurozone’s stability.”
Over in the US, equity markets continued their recent run of record high closes on Friday with “a phenomenal turnaround from General Electric alongside strong performances from Boeing, UnitedHealth and Goldman Sachs on tax reform hopes helped the Dow Jones climb 165 points.” suggested Accendo Markets analyst, Henry Croft.
“The S&P 500 also finished at a record high thanks to tax reform-inspired Financial sector gains, while the Tech-focused Nasdaq finished 0.3% higher at a record closing high.”
