Selling gathers pace

The London rally has finally come to a halt, with the FTSE 100 unchanged as the close looms, says Chris Beauchamp, chief market analyst at IG.

Selling gathers pace

With heavy snow forecast this evening most traders will have turned their attention away from their screens and towards the journey home. But aside from London, where miners and oil stocks are preventing a move into the red, stock markets are under pressure.

The apparent demise of the rally is being blamed on disappointment following the President-elect’s press conference, but in reality the surge was already running on air, with US markets in particularly having essentially gone nowhere since mid-December. This fact was masked by the ongoing hope of Dow 20,000, but it looks like this has been scrubbed from the timetable for the next few weeks.

At some point, Primark is going to run out of new shops and then the sales figures will start to look really ugly. It looks like the budget clothier, and ABF’s profit growth with it, is in for a tough time, which helps to explain why 5% has been wiped off the share price this afternoon.

All the jitters in the market this afternoon could be rapidly dispelled if tomorrow’s bank earnings come in ahead of expectations, but at present the sector seems priced for perfection, and thus the risk is skewed to the downside. Citigroup downgraded Goldman to sell this week, in a move that raised a few eyebrows, but perhaps the bank’s move will be considered prescient in a few days’ time.

Please remember, no news or research item is a recommendation or advice to buy. Every Investor is not responsible for accuracy and may not share the author’s views. If you are unsure of the suitability of any investment for your circumstances please contact an adviser. All investments can fall as well as rise in value so you could get back less than you invest. 

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