FTSE flat as investors mull the case for rate easing

Adam Vettese, Market Analyst at eToro, says:

“Today’s GDP data is a reminder of the headwinds the UK economy faces, with retail sales a particular area of weakness across a broad-based decline in economic activity. The quarterly decline of 0.3% was steeper than anticipated and, allied with yesterday’s tepid inflation data, the argument for the BoE to ease in the near future is starting to look compelling.

“The data adds to concerns over the health of global growth, with news this week that Japan has also fallen into recession, but it’s a bit of a double-edged sword for investors. On the one hand, we have confirmation of the tough environment in which companies are operating, but also heightened expectations for looser monetary policy.

“BP and Shell are prominent laggards in the index today, both slipping more than 2.5%. Weekly data from the US Energy Department yesterday showed a large build in crude oil stockpiles, which is pressuring the price of oil.”