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FTSE 100 flat on ex

Aug 26, 2023Aug 26, 2023

The FTSE 100 paused on Thursday as investors awaited major economic data to be released tomorrow, and a raft of FTSE 100 companies traded ex-dividend.

August has been the worst month of 2023 for stocks, with US, European, and the UK’s indices posting declines.

The FTSE 100 was trading up 5 points at the time of writing on Thursday and is down 2.9% in August.

However, in the context of prior drawdowns in equity markets, August has been relatively benign. This poses the question of whether September will continue with August’s poor performance or if buyers will step in to support stocks.

The first indicator of how things will go in September will come in the form of the US jobs report tomorrow, which has the potential to set the tone in risk assets.

US equities have rallied this week after several softer economic data points increased hopes the Federal Reserve would hold off increasing rates at their next meeting. Tomorrow’s Non-Farm Payrolls report will be closely watched to see if it corroborates recent softer data.

“The FTSE 100 was holding on by its fingertips to its latest move higher as investors awaited the latest reading of core inflation from the US,” said AJ Bell investment director Russ Mould.

“The markets are so data driven right now, aping the stance adopted by central bankers, and it feels like a worse than expected reading could extinguish the recently improved sentiment.”

There is a clear divergence in US and European inflation, which will soon play out in central bank action. The Bank of England looks set to hike rates at its next meeting, while the Federal Reserve has ample reason to hold off.

Going into September, investors should be cautious of a strengthening pound that may cap gains in the FTSE 100’s overseas earners.

Today’s movers were dominated by companies trading ex-dividend, including Glencore, Antofagasta and Diageo.

Top performers Ocado and Rolls Royce enjoyed end-of-month window dressing with gains of 2.2% and 2.4% respectively. Rolls Royce is this year’s top-performing FTSE 100 stock, and fund managers clearly want to be seen to be holding the stock.

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