FTSE Set to End May Near Its Highs
Despite the FTSE 100 trading slightly lower so far today, it's been a good end to the month for the UK blue chip index which has shrugged off some early weakness and is currently marginally higher for May. The pound has also recovered well after a shaky beginning to the month and with the EU referendum date fast approaching well publicised concerns regarding the currency's demise in the event of a Brexit seem to have been shrugged off thus far, despite recent polls suggesting the outcome is still far from certain.
Insurance groups lead the index
RSA Insurance leads a list of the gainers for the benchmark so far today, up by more than 1.60% at the time of writing. Admiral Group and Direct Line
are also enjoying notable rises as the Insurance sector as a whole
looks to end the month on a positive note. While mining stocks overall
are slightly soft this morning their declines are relatively small
compared to recent swings, with BHP Billiton the
biggest faller and off by 1.65%. Following the long weekend there's been
no major fundamental developments and caution should be heeded in
reading too much in to any moves today, as they could simply be a case
of month end rebalancing.
Latest Brexit poll sees Pound depreciate
The Pound has pared back some early gains made during the Asian session
and actually gone negative against some crosses following a Brexit poll
from the Telegraph which showed a narrowing in the lead for the remain
camp. The announcement saw sellers enter the GBPUSD market once more
around the 1.47 handle and send price lower in a move that has been the
case in recent attempts by the pair to enter positive territory for
2016.
Erratic Chinese markets flash warning signal
Overnight, an unexplained drop in Chinese stock-index futures of 10% -
before a snap-back within the same minute - raises fresh concerns about
the market's ability to function efficiently. The drop has been
attributed to a hedging account, which through its definition is exempt
from limits on opening more than 10 contracts in a day, and highlights
that the declining levels of liquidity over the past year have served to
increase volatility. Trading volume has plummeted by more than 90% from
its peak after officials raised margin requirements, tightened position
limits and started a police probe into bearish wagers last summer.
Despite this "blip" the underlying CSI300 rose 3.4% on the day but still
remains lower by 15% on the year.
