Ignoring the negative sentiment that dragged on trading in the US and Asia overnight, the FTSE bounded higher on Wednesday. Snapping a three-day losing streak and with only a handful of firms in the red, the FTSE managed to power back through 7000. Bank were notable risers as was Johnson Matthey, which jumped over 10% after first-half results surprised to the upside.
Sales at Johnson Matthey increased over 10% whilst underlying profits grow by 8% to £271 million. The Clean air division at the firm has grown over 10%, driven by demand from Europe, amid tighter European emission regulations. Investors are recognising that Johnson Matthey looks to be sitting on a gold mine with its Clean air division. We only realistically expect European emission regulation to tighten further – and this is being reflected in the share price.
Sterling holding its nerve amid Brexit headlines
The pound acted as neither support or resistance to the FTSE, trading flat around $1.28 for most of the session. Pound traders were holding their nerve as Theresa May headed to Brussels to try to finalise the Brexit deal and to put the finishing touches to the political declaration on future partnership. There were still some creases that need to be ironed out and back home the Eurosceptics will be hoping for some last minutes adjustments to the deal. They are likely to be disappointed, as May appears set to continue ploughing ahead with the Brexit plan as it stands; a position which is offering some support to the pound in later trading.
Italian bond yields drop despite Italian budget rejection
Today was a key date in the diary in the ongoing clash between Brussels and Rome. Despite the European Commission rejecting Italy draft budget plans and recommending disciplinary procedures, Italian debt rallied, pulling yields sharply lower. Italian Prime Minister Matteo Salvini’s defiance, vowing to keep the budget deficit target at 2.4% had little impact on yields, which dropped over 3% on the day.
Apple has lost its mojo
After extensive selling earlier in the week, Wall Street was on the rebound. Tech shares were doing some of the heavy liftings with Facebook up 2%, with Amazon and Netflix not far behind. Apple was also trading higher after two days of heavy selling; the stock was up 0.2% at the time of writing. This move higher is lacklustre at best and won’t be convincing any investors that we are witnessing a turnaround after the stock fell into a bear market territory. On a good day, Apple is tagging along behind the rest, on a bad day it is tumbling lower; a sign that the Apple momentum trade is over.