Poor German manufacturing fails to dent equity rally
|In mid-morning trading the FTSE 100 is up ten points, while Royal Mail shares slump following a miserable trading update.
Bullish momentum continues to carry equities higher this morning, although strength has begun to wane as investors prepare for tomorrow’s non-farm payroll report. US markets are back at record highs, while the Dax seems prepared to follow suit, even if it is displaying further caution around the 13,600 mark, the peak of the past two years. Some of the strength in European markets will be down to the utterly abysmal performance of the euro this week, which has conspicuously failed to follow up on the strength displayed at the end of January, and has instead fallen right back to $1.10. It has held this level religiously since November, but with this morning’s dire manufacturing figures from Germany weighing heavily the outlook seems grim. Having already gained over 3% this week the FTSE 100 is beginning to look a touch exhausted, especially now the flow of good news out of China seems to have eased off, but having steadied itself this week we should see further upside for global indices from here.
Royal Mail had been gaining ground over the past nine months, but all that seems to have come to an end with this morning’s 10% fall. The shares have given up all their gains since June, and the bearish view seems justified given that management seem set on adding industrial strife to their existing problems. Perhaps such a tough approach will be the right one in the end, but it is not one likely to engender much confidence among investors.
Ahead of the open, we expect the Dow to start at 29,387, up 97 points from Wednesday’s close.
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