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Markets waver as sentiment wanes

European markets struggle in early trading as investors switch back into ‘risk off’ mode.

Canary Wharf
Source: Bloomberg

Considering the proximity of the UK General election markets had discounted the chances of a change in voting for either the base rate or the asset purchasing scheme, and so it transpired as the Monetary Policy Committee continued its watching brief. They say a week can be a long time in politics and the IG political markets are currently indicating a 60% chance of Ed Miliband being the next Prime Minister and a 40% chance for David Cameron, almost the complete inverse of where we stood a week ago.

Tesco CEO Dave Lewis has flung the closet doors wide open in an effort to draw a line in the sand regarding the embattled food retailer’s historical issues. Considering the company has had to write down £4.7 billion in store values, fill a deficit of £3.9 billion in its pension pot and saw profits collapse from £3.9 billion a year ago down to £1.4 billion today, the market reaction has been remarkably calm.

Having announced figures during Australian hours, BHP Billiton investors were well prepared for the negative news. Another 6% reduction in the company’s anticipated 2015 copper production has been the catalyst for institutional analysts to start lowering the price targets for the year  ahead.

Ahead of the US markets opening we will see the latest first-quarter figures for Boeing, Coca-Cola and McDonald's, and during trading hours these will be accompanied by Bank of New York Mellon and Qualcomm.

After the US markets close we will then see AT&T, eBay and finally Facebook. Saving the best for last, the social media giant should get plenty of ‘likes’ as it is expected to post a jump in its year-on-year Q1 figures of 67% to $1.798 billion, once again setting the standard for social media companies when it comes to monetising their user base.

Ahead of the open we expect the Dow Jones to start 63 points lower at 17,886.

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