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Markets await interest rate decisions

The escalation of sanctions, coupled with looming interest rate decisions, has seen a shaky start to the FTSE 100 as traders prepare themselves for a day of disappointment.

Canary wharf
Source: Bloomberg

Once again the markets' focus will be on interest rate decisions, or more importantly the accompanying comments from the Monetary Policy Committee as the Bank of England is unlikely to change the rate. The MPC rate statement should ensure that conclusions for potential timelines are swiftly jumped to. The burden of propping up the rest of the eurozone looks to finally be taking its toll on Germany, as for the second day in a row disappointing production figures have shaken the markets' confidence that they can make up for the underperformance of their neighbours.

The early afternoon press conference from the European Central Bank should offer more entertainment, as the increasingly isolated ECB president, Mario Draghi, telling people not to panic should do nothing to ease eurozone worries. The sanctions' 'tit for tat' war looks to be ratcheted up as Russia imposes food sanctions of their own, increasing the chances of this developing into a 'no win' situation for both sides.

The absence of political interference and pressure has seen ex-Royal Bank of Scotland CEO Stephen Hester demonstrate his skills with RSA Insurance, posting a pre-tax profit of £69 million only five months into his operation to turn the business around.

Aviva CEO Mark Wilson has pleased the markets having hit all three key targets stating that the company has 'reduced debt, decreased expenses and increased profits', something many companies have found easy to target yet difficult to achieve.

Randgold Resources has impressed the markets with quarterly profits up 54% even with a less than helpful gold price. However, with numerous operations throughout Africa, the current ebola crisis could derail this current resurgence.

British defence firm Cobham has seen profits collapse as government defence spending continues to shrink and the strength of the pound has eaten into profits.   

By the time US traders get behind their desks most of the European economic data inspired froth should have dissipated, but the lingering suspicion that all is not well looks set to persist. We are now down to the tail-end of the reporting season and as positive as it might have been, broader worries about global issues have wiped out any chance of over confidence in US traders. Ahead of the open we expect the Dow Jones to start 40 points higher at 16,483.

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