The FTSE 100 paused for breath on Monday with no new catalysts to spur another leg higher in London’s leading index.
T”he FTSE 100 was probably due a pause after a breathless period which has seen it mark record after record and Monday morning saw the index take a seat,” says AJ Bell investment director Russ Mould.
The index broke to fresh highs last week after the Bank of England signalled it would cut interest rates soon, and the UK exited recession with 0.6% GDP growth in Q1.
The FTSE 100 has outperformed its US counterparts over the past month, with miners, banks, and housebuilders driving a cyclical rally.
Now the Bank of England looks set to cut interest rates in the near future, the melt up in stocks may have to face a more stringent test. Global growth.
Lower rates will help spur growth, but both the Bank of England and Federal Reserve may only cut once this year, so the real-world impact will likely be fairly muted should they walk that path.
“Some caution is creeping back in, amid concerns that high interest rates may have to linger for longer in the United States, with the key CPI inflation reading expected this week,” said Susannah Streeter, head of money and markets, Hargreaves Lansdown.
Softer data from China took the wind out the miners on Monday which contributed to a slower session. “China’s economic recovery has hit another bump in the road, with the latest data showing scant progress,” Streeter said.
Rio Tinto fell 0.9% while Glencore was flat and Anglo American eeked out a 0.3% gain.
Diploma was the FTSE 100’s best performer, jumping 4% as adjusted operating profit soared 14% in the recent half year.
“One of the FTSE 100’s lesser lights – specialist distribution business Diploma – was taking its moment in the spotlight as it lifted annual guidance,” Russ Mould said.
