Asos on the move in London

In the last year the first Thursday of the month has often felt like any other day, but this edition is the most anticipated for some time as markets position for a new chapter in the book of Draghi.

Equities in London have trickled lower, with the FTSE 100 off 15 points at 6803, while the pan-European DJ Stoxx 600 is currently trading a fraction better.

Before the main event, trading on IG floors has centred around two stocks this morning. Internet retailer ASOS, once the darling of the sector, has plummeted over 30% after informing the market of a tightening profit margin, just a few months since its last warning. Prior to today’s move, the shares were trading on a price-to-earnings ratio of around 100, which was still way off its highs in March of around 150 (when the stock was at £70). The feeling that the market is waking up to ASOS as a retailer and not a tech story cannot be ignored. Still listed on AIM, so despite its size it is not in the FTSE 350 retailers sector where most of its peers trade on a PE ratio in the teens. 

The second story is the emergence of a not long dead bid story for Smith and Nephew (+5%). Having seen US firm Stryker take a glance at them last week, Medtronic, also from the US, were reported to be running the numbers last night.

A twentyfold increase in trading in the SN ADR in US trade last night, paved the way for another heavy volume session on today’s London open; £15 per share is the dream scenario here according to analysts at Barclays.

It has certainly been a busy few weeks for the panel of takeovers and mergers, and equity dealers will be hoping this M&A activity will continue through the summer so that they have something to occupy their time with.  

Back to the European Central Bank, and we expect the post decision press conference to be the main focus. Having seen rangebound trading in EUR/USD this week, an increase in volatility should be expected. Event risk is definitely in play, but perhaps 'disappointment risk' is the biggest thing to consider at lunchtime. Mario Draghi has so far managed to get the market to do his work for him in driving down the euro, but surely he needs to get his hands dirty to get it down towards the $1.3 level where he would like it to be. 

You can read @ChrisWeston_IG on the ECB and EUR/USD from earlier this morning here.

The ECB decision is at 12.45 with the conference from 13.30 (London time). EUR/USD has seen a small bid this morning and is trading just above $1.36. US markets are called a touch lower from last nights close, with the Dow Jones at 16,730, down less than 10 points. 

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