Disappointing UK production figures and the ongoing political deadlock in the US weighed on market sentiment on Wednesday morning, with the FTSE 100 subdued after hitting a three-month low the day before.
London's benchmark FTSE 100 index was trading broadly flat by midday, erasing earlier losses, after ending Tuesday's session at 6,365.83, a level not seen since July 3rd when it closed at 6,229.87.
Alastair McCaig, Market Analyst at IG, said of the price action: "Confidence that the US will get its act together is slowly turning into fear, and the chances of the FTSE seeing a 6,200 handle in the coming days are increasingly likely."
Not even the news that well-known dove Janet Yellen will be nominated as the next chair of the US Federal Reserve lifted stocks this morning. Yellen will be the first female at the head of the US central bank and is widely expected to argue for a continuation of aggressive monetary easing started by her predecessor, Ben Bernanke.
UK data fails to impress
Domestic economic data was providing some downwards pressure on markets after industrial production unexpectedly declined by 1.1% in August, its biggest fall since September 2012. This was worse than the revised 0.1% expansion in July and well below than the 0.4% increase expected.
Core manufacturing production meanwhile slipped by 1.2%, missing the consensus forecast for 0.4% growth.
"August's weak industrial production and trade figures signal that gross domestic product (GDP) growth in the third quarter might not be quite as strong as the business surveys have suggested," said UK Economic Samuel Tombs from Capital Economics.
Nevertheless, he pointed out that these falls do not reverse all of the rise in production seen in the previous two months. "Indeed, industrial production is still on track to make a small positive contribution to GDP growth in third quarter."
Impasse continues Stateside
There has been some, albeit small, developments on the debate over the debt ceiling overnight after President Barack Obama said he was open to a short-term deal to raise the debt ceiling and reopen the government but only if it is not attached to conditions.
He said he was willing to hold budget talks with the Republicans as long as they lift "threats" against the economy and stop demanding concessions in policy in exchange for a deal. "[They] don't get to demand ransom in exchange for doing their jobs," the President said.
According to reports, Senate Democrats are planning a test vote in the coming days over whether to give Obama to authority to raise the debt ceiling in the short term.
However, House Speaker John Boehner remained defiant, saying that an immediate increase in the debt ceiling without conditions was "unconditional surrender". He said: "There's going to be a negotiation here [...] It's time to have that conversation."
Source: Live Charts
London's benchmark FTSE 100 index was trading broadly flat by midday, erasing earlier losses, after ending Tuesday's session at 6,365.83, a level not seen since July 3rd when it closed at 6,229.87.
Alastair McCaig, Market Analyst at IG, said of the price action: "Confidence that the US will get its act together is slowly turning into fear, and the chances of the FTSE seeing a 6,200 handle in the coming days are increasingly likely."
Not even the news that well-known dove Janet Yellen will be nominated as the next chair of the US Federal Reserve lifted stocks this morning. Yellen will be the first female at the head of the US central bank and is widely expected to argue for a continuation of aggressive monetary easing started by her predecessor, Ben Bernanke.
UK data fails to impress
Domestic economic data was providing some downwards pressure on markets after industrial production unexpectedly declined by 1.1% in August, its biggest fall since September 2012. This was worse than the revised 0.1% expansion in July and well below than the 0.4% increase expected.
Core manufacturing production meanwhile slipped by 1.2%, missing the consensus forecast for 0.4% growth.
"August's weak industrial production and trade figures signal that gross domestic product (GDP) growth in the third quarter might not be quite as strong as the business surveys have suggested," said UK Economic Samuel Tombs from Capital Economics.
Nevertheless, he pointed out that these falls do not reverse all of the rise in production seen in the previous two months. "Indeed, industrial production is still on track to make a small positive contribution to GDP growth in third quarter."
Impasse continues Stateside
There has been some, albeit small, developments on the debate over the debt ceiling overnight after President Barack Obama said he was open to a short-term deal to raise the debt ceiling and reopen the government but only if it is not attached to conditions.
He said he was willing to hold budget talks with the Republicans as long as they lift "threats" against the economy and stop demanding concessions in policy in exchange for a deal. "[They] don't get to demand ransom in exchange for doing their jobs," the President said.
According to reports, Senate Democrats are planning a test vote in the coming days over whether to give Obama to authority to raise the debt ceiling in the short term.
However, House Speaker John Boehner remained defiant, saying that an immediate increase in the debt ceiling without conditions was "unconditional surrender". He said: "There's going to be a negotiation here [...] It's time to have that conversation."
Source: Live Charts
