FTSE Edged Lower, Instability Remains

Published by Filipe R. Costa on Wed, 02/03/2011 - 18:29

The FTSE 100 opened lower today, pushed down by yesterday sell off in US markets mostly due to all the instability in the Middle East.

At 9.30am GMT, the Construction PMI was released in the UK, with the index showing a reading of 56.50, higher than expected, indicating expansion of the manufacturing in the construction industry. This helped the GBP against its major pairs, in special against the USD. The pair started the day at 1.6226 and edged higher to 1.6324 at UK markets close, a gain of 100 points.

The FTSE 100 started recovering some earlier losses after the release of Construction PMI, and with the help of positive data from the US it recovered to positive terrain reaching 5940 points.The instability in the Middle East is still weighting on markets, and pushing oil prices up. Investors started selling off shares around 4.00pm GMT, and the FTSE ended the day at 5914, -0.35%. The UK index was saved by the bell since the sell off continued in Wall Street, with the DOW30 losing almost 100 points between 4pm and 5pm. However, at the time of writing, the DOW has just recovered part of those losses.

Investors are nervous with the political instability, fearing a contagion of Libya crisis to other Middle East countries in special Saudi Arabia. Such a contagion would certainly lead to a much higher oil price, undermining future growth prospects for major companies and economies. Until the instability eases, we are likely to assist to high volatile markets, rising and falling fast in small time intervals. Economic reports are showing an economic expansion both in Europe and the US, but investors have their eyes turned to other side.