The FTSE 100 struggled for direction on Thursday as nagging concerns about trade and ex-dividend prevented the index from attacking all-time highs, while improving optimism around the TACO trade kept investors in the market.
London’s leading index was trading up 0.1% at the time of writing.
“UK markets are in a holding pattern, with the FTSE 100 patiently waiting for a fresh catalyst to deliver the final push toward new all-time highs. The UK-US trade deal appears to be doing enough to insulate UK markets from excessive Trump-related volatility, though it remains to be seen how long this relative calm will last,” said Matt Britzman, senior equity analyst, Hargreaves Lansdown.
With the FTSE 100 so close to record highs, the psychological element to trading starts to creep in, and investors will start to question whether we’re in the right environment for the UK’s benchmark equity index to trade at fresh records.
Traders will also be conscious that the sharp recovery for Trump’s Liberation Day announcement leaves the index vulnerable to a wave of profit taking on the slightest of negative developments.
Investors will also have one eye on the ECB and their rate decision. As always, the press conference will likely provide the most potential for a market move with rates expected to be cut again for the 8th time in a row.
“Inflation isn’t a problem, but sluggish economic growth is. That points to further monetary easing to encourage more borrowing and spending by consumers and businesses,” AJ Bell’s Russ Mould said.
Although the FTSE 100 was fairly flat on an index level, there were underlying signs of caution. There was again a bid in safe haven stocks such as precious metals miners, pharmaceutical firms, and consumer staples that suggested investors weren’t entirely convinced about the immediate outlook for stocks.
Precious metals miner Fresnillo enjoyed buying interest with gold and silver prices trading near recent highs.
WPP was the top faller as the stock traded ex-dividend. Sainsbury’s shares were in the same boat.