Spreadex Market Update

FTSE flaccid as pound hits fresh highs against dollar and euro, pre-Fed jitters for Dow



Wednesday is pretty stuffed, with the first Fed meeting of 2021, and earnings from Apple, Facebook and Tesla.

Sadly for the European markets, all of that happens after the market has closed, meaning a frustratingly mixed session might be on the cards.

Abandoning Tuesday’s growth by closing time, the FTSE drifted lower once again on Wednesday, ducking below 6,650. That means the index is now closer to where it opened January than the highs it struck in the first week of the year – and it wouldn’t take the sharpest acceleration in its losses for it to erase the remaining 160 or so points.

Alongside the hum of covid-19 lockdown anxiety that has plagued the FTSE since the third set of restrictions were put in place, the index’s biggest issue is the pound. Thanks to US stimulus speculation, cable is at its best level for close to 33-months, trading above $1.374. Against the euro, meanwhile, a 0.2% increase this Tuesday has lifted sterling to an 8 and a half month peak of €1.1304, the single currency harmed by vaccine supply troubles on the continent.

In the Eurozone, the DAX – which saw a substantial rebound on Tuesday – fell 0.4%, leaving the bourse at 13,830. This as German consumer sentiment plummeted, hitting -15.6 against the -7.8 forecast and the -7.5 see the month prior.

At present the Dow Jones is heading for a 0.3% decline after the bell, a drop that would put it below 30,900. A 4% post-market increase for Microsoft yesterday evening – the firm saw its Azure cloud services arm see a stronger than expected 50% surge in revenue – is battling with pre-Fed jitters.

Investors will be nervously on the lookout for any signs that the central bank is going to start reducing its current support, now that the Biden administration is in power and a fat stimulus package should be coming down the pipeline.

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