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ECB QE unable to jump-start markets

As Greek issues once again come into focus Europe has started the week giving back some of last week’s gains. 

ECB headquarters
Source: Bloomberg

European equity markets have started the week on a slightly shaky footing with Greece addressing Brussels as it seeks approval for a raft of new government financing proposals. With the looming €2 billion it is due to pay back on Friday and the disquiet of the Greek populace again, Syriza could do with things going its way for a change.

On the plus side today is the start of the new European Central Bank quantitative easing policy and the floodgates for a monthly €60 billion boost to the region. With debt yields already low this fresh liquidity should ensure that they don’t go anywhere anytime soon. The inability to receive a decent income from the debt market has seen the attractiveness of equities highlighted.

A combination of the QE safety net and the dividend income available will give serious weight to equity indices driving higher, as both capital and income returns have a more sure footing.

Martin Sorrell has again overseen a good year for WPP, as the global communications specialist has seen profits increase by 12% even with the currency market working against it. Predictions that Asia would continue to be the engine behind future figures were accompanied by comments that it had seen a mild improvement in the eurozone.

The UK taxpayer continues to make inroads into chipping away at the holding in Lloyds, as recent sales have brought the position down to 22.98% and remain on track for the 20% holding wanted prior to the general election in May.

Another week and another story about one of the UK banks’ historic indiscretions is in the headlines. This time it is the turn of  Barclays, as former traders are being called for interviews by the Serious Fraud Office over the possibility of Euribor interest rate manipulation.

Following the strength of Friday’s non-farm payrolls and the surprising drop in US unemployment figures down to 5.5%, traders could be forgiven for feeling the US equity markets close last week was a little on the underwhelming side.

In recent years there has been a drop in sales of watches, as more and more consumers use their smartphones as more than just a phone. It is somewhat ironic the excitement that today’s Apple watch launch is generating. As encouraging as a new product launch might be, you can’t help but feel that a meaningful plan of action to more constructively use the excess of cash the company has would have a bigger effect on Apple’s share price. 

Ahead of the open we expect the Dow Jones to start nine points lower.

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