Correction in resource stocks lifts FTSE

In mid-morning trading the FTSE 100 is up 76 points, at 6733, as energy and mining stocks swing back into favour with traders. 

Miners at work
Source: Bloomberg

The FTSE 100 is outperforming its European equivalents as the delayed correction in natural resources stocks lifts the London market. We are two days away from the European Central Bank meeting and dealers are anticipating at least a hint of QE from Mario Draghi. The ECB chief can’t keep stringing traders along with suggestions of adding government bonds to the asset purchasing scheme, but for the time being it is music to equity traders' ears.

Shares in ITE Group are down 5% in early trading as the record full-year pre-tax profits couldn’t override the company’s excessive exposure to Russia. The value of the company is down 52% year to date, and even though the conference organiser has already locked in half of its 2015 revenue target traders are still turning their back on the stock. The British-based company is making inroads to China, India and Malaysia but, while Moscow is being squeezed by sanctions and soft energy prices, it is going to be from Russia without love for ITE Group.

Matt Simister will return to duty as a director at Tesco after stepping to one side in the fallout of the accounting scandal. This is a small step to restoring confidence in the struggling supermarket. Tesco is trading higher today, but as long as the Serious Fraud Office investigation still hangs over the retailer, traders will be cagey of the company.

Tullow Oil is the biggest gainer on the FTSE 100 as a stabilisation in the price of oil has sent funds flowing back into the oil explorer. I feel any rally will be short-lived as it has been a difficult few years for the Irish firm; a series of unsuccessful wells have hammered the share price and now multi-year lows for oil are adding to its problems.

In the US, we are calling the Dow Jones up 59 points at 17,835 as the ECB stimulus chatter can be heard on Wall Street. Janet Yellen is expected to deliver a speech in New York before the NYSE opens, and dealers will be demanding dovish commentary from the Federal Reserve chief.

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