After dropping sharply on the open following Iran’s attacks overnight, the FTSE staged a comeback across the morning. Risk sentiment improved after comments from the White House that damage had been negligible, helping lift the FTSE to break even before the index slipped back into the red for the afternoon.
Investors are now looking ahead to a speech by President Trump, which will set the tone for US session and for risk sentiment in the coming sessions. With no causalities and little damage caused by the 22 missile investors perceive the chances of Trump retaliating as small and the probability of a US – Iran war receding.
Oil a pulled back from its overnight spike and is now trading in negative territory, down 1%. Flows into safe haven gold have also waned as tensions have ebbed and the precious metal is back at break even.
Pound Recovers
The FTSE has pulled back below break even again this afternoon as the pound stages a recovery.
Sterling was out of favour in early trade as the focus turned back to Brexit and the UK’s future relationship with the EU. European Commission President Ursula Von der Leyen marked out her red lines, warning the UK to stick closely to EU rules if it wanted to arrive at a far-reaching trade deal with the EU. A level playing field is what the EU are looking for.
Time will tell whether it is what Boris Johnson is prepared to offer. Pound traders were initially dubious. However, the rebound in the pound this afternoon suggests that optimism that a deal can be reached remains.
Dollar Pares Gains Despite Strong ADP (NASDAQ:ADP) Data
The US ADP private payroll report added a whopping 220,000 jobs in December, this was well ahead of expectations of 160,000 jobs and November’s 67,000 jobs created. Despite the impressive data, the dollar is paring gains, as flows towards riskier assets pick up.
NMC Health, Tui, Boeing (NYSE:BA)
NMC Health (LON:NMC) was the standout decliner dumping 16% after biggest shareholders plan to sell stake totalling £373 million. The questioning of NMC Health’s financial position by Muddy Waters was the nail in the coffin for this stock. Doubts over is debt and cash position have sent investors fleeing. After shedding 40% of its value in the past few weeks, the chances of a turnaround here look slim at best.
Tui (LON:TUIT) also dropped sharply across the session following the crash of a Boeing (NYSE:BA) 737 -800 Airliner belonging to Ukraine International. The flight crashed shortly after taking off from Tehran’s international airport causing 176 deaths. These are troubled times for Boeing which is still dealing with the fallout from two tragic Boing 737 MAX air crashes.
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