FTSE 100 preview: Blue-chip index to take a breather after rally

on Nov 24, 2014

iNVEZZ.com, Monday, November 24: The FTSE 100 is set to kick off the last week of November on a downbeat note following last week’s rally with investors staying cautious ahead of the outcome of nuclear talks with Iran.
*h*Muted start on the cards*h*
According to IG, the UK benchmark index will open five points lower at 6745. Investors are expected to stay on the sidelines this morning, awaiting the outcome of negotiations between Iran and six world powers over Tehran’s nuclear programme.
US stocks rallied on Friday with the Dow Jones and the S&P 500 soaring to record highs after China’s central bank made its first interest rate cut in more than two years and with European Central Bank President Mario Draghi signalling more drastic measures to combat deflation in the eurozone.

“I don’t think it’s really important to rationalise which is more important,” CNBC quoted Art Hogan, chief market strategist at Wunderlich Securities, as saying. “One impacts the market now, one later.”
In Asia, stocks rose this morning, tracking US shares higher.
“”Stimulus has been the magic fix for equity markets over the past six years””
“Stimulus has been the magic fix for equity markets over the past six years and the mere sign it will eventuate is enough to be championed by the markets,” Evan Lucas, a market strategist at IG, wrote in a note to clients, as quoted by Bloomberg. “We now have three of the four largest central banks in the world actively stimulating their respective domestic economies.”
Today, investors will look out for the closely watched German Ifo business climate index for November, due out at 09:00 GMT. IG reports that forecasts are suggesting a move from 103.2 to 102.37. In the US, the preliminary services Purchasing Managers’ Index for November is expected at 14:45 GMT.
No blue-chip companies are scheduled to report today.
*h*Fifth straight week of gains*h*
The FTSE 100 rallied on Friday, adding 71.86 points to close 1.08 percent higher at 6,750.76. The blue-chip index posted its fifth consecutive week of gains on the back of China’s surprise rate cut which lifted London-listed miners. Anglo American (LON:AAL) and Rio Tinto (LON:RIO) climbed to the fop of the FTSE 100 leaderboard with Anglo American’s share price closing 6.69 percent higher at 1,380.00p and shares in Rio Tinto adding 6.18 percent to finish at 3,042.00p.
“In the UK a rising tide lifted all boats with mining stocks being the biggest beneficiaries of rising commodity prices as a result of the Chinese rate cut,” Jasper Lawler, analyst at CMC Markets, told Reuters.

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