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FTSE lower on cocktail of factors

by LLB Reporter
11th Jul 22 10:10 am

After a tumultuous start to 2022 the past month or so has seen global markets largely in limbo as investors seek to make judgements about whether any sort of soft landing for the economy can be engineered while still bringing prices under control.

This week sees three catalysts which could shake investors out of their torpor as we get the latest reading of US inflation, GDP figures from China and the big US banks kick-off the second quarter earnings season across the Atlantic.

There will be plenty of clue hunting going on as we await the latest decision from the US Federal Reserve at the end of this month. The key question is whether Jerome Powell and his colleagues will double up with another 75 basis points rise or if they’ll ease off to avoid the medicine for rampant inflation proving worse than the disease.

AJ Bell investment analyst Danni Hewson said: “The FTSE 100’s outperformance compared to other global markets has started to falter as the commodity stocks that helped support its relative strength begin to run out of steam.

“Metals prices had already turned and energy markets are starting to struggle too as attention turns to the pressures on demand now the initial supply shock associated with Russia’s invasion of Ukraine has begun to abate. Miners helped drag the FTSE 100 lower on Monday morning as a result.

“In this context the latest Chinese growth figures will be closely watched, given it is one of the most commodity-hungry economies in the world, with the impact of Covid restrictions in particular focus.”

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