FTSE 100 preview: Natwest results and economic data dump put holidays on hold

After the vim and vinegar that characterised the first half of the week, UK and world markets seem content to drift into the weekend on a mid-February lull, dreaming of summer holidays on a Greek island.

THE FTSE 100, which was given a leg-up by stonking numbers from the big mining groups on Monday and Tuesday, is expected to dip again slightly today.

Natwest, owner of RBS,  will follow Barclays with its annual results. Two-thirds government owned and a major lender to small and mid-size businesses, it is expecting to have set aside up to £4billion for bad debts while rumours of a total withdrawal of its Ulster Bank brand from Ireland does not inspire confidence that it is set to break records.

The pound has been on a tear against the dollar, hitting a 34-month high yesterday, further weighing on the blue-chip index which was being called down to open down 13 points this morning. 

More downbeat economic and jobs data from the US overnight could add to that momentum, although a sense of vertigo may kick in as the cable nears the $1.40 threshold.

Prime Minister Boris Johnson will set out his latest, and hopefully last, exit strategy from national lockdown on Monday and the markets seem content to wait for those details before deciding the next big play.

The Times reckons summer getaways with vaccine passports to ‘safe zones’ like Greece are ‘increasingly likely’.

This morning a raft of economic data will roll in from around the world with the UK retail sales index forecast to see a 2.5% fall, a sharp but not unexpected fall from December’s 0.3% growth.

Output data for the UK’s dominant services sector could shake things up a little at 9.30am. The flash reading is expected to hit 41, up from 39.5 last month, but still well below the benchmark of 50 which separates growth from shrinkage.

The manufacturing PMI report is also predicted to dip from 54.1 to 53.2 in February.

At the same time, UK public sector net borrowing for January will be announced and the reading is tipped to be £24.5 billion, down from £34.1 billion in December. But still eye-watering on an historical basis.

David Madden, market analyst at CMC Markets , said: “With respect to today’s retail sales reports, traders are already bracing themselves for poor figures so sterling is unlikely to suffer unless the update is dire.”

In the wider world, copper continues to be on a roll hitting a nine-year high yesterday on longer-term hopes of a global recovery (for which read, China got back to work for its first trading session since Lunar New Year). 

Oil, too, is up too reaching a 13-month high yesterday before taking a look around and pulling its head back in. The Texas big freeze has stalled production in the US,  with inventories down by a bigger than expected 7.25 million barrels: there are expectations that could fuel another rise beyond $60 next week.

Bitcoin and other crypto’s remain in tulip-mania heaven near their all-time highs but gold is in trouble.

Jeffrey Halley, Senior Market Analyst, Asia Pacific, OANDA, says: “Gold could fall to near $1600 an ounce next week if a failure of $1750 sparks a capitulation scenario. I am beginning to wonder if its inflation hedging role has been temporarily usurped by instant gratification, sure thing FOMO gnomes of the crypto world.”