The big three central banks – Federal Reserve, Bank of England and European Central Bank – are all underpinning the rally in equity markets this morning. The minutes from the Fed last night suggested that rates will not be moved in the near future, and the BoE meeting at noon today is also expected to keep its policies unchanged. Whispers about possible quantitative easing from the ECB later this month are also still being heard on trading floors this morning, and a flurry of corporate reports has added to the bullish sentiment.
Tesco is leading the FTSE 100 leaderboard after announcing a series of cost-cutting measures to turn the troubled retailer around. The decline in third-quarter like-for-like sales was of little interest to traders, whose focus was on its recovery strategy. CEO Dave Lewis has made a good start at rebuilding confidence in the company, but he still has a long way to go yet. The disposal of Blinkbox and the halting of the final dividend will help beef up the balance sheet, but Mr Lewis will need to enhance transparency to in order to win back institutional investors.
The clothing department at Marks & Spencer is still proving to be a thorn in the side of the retailer, and its poor figures released this morning have taken the shine off its stellar food division. With comparisons inevitably made to the relative strength of shares in the past year, it has become a target for shorting today.
We are expecting the Dow Jones to open 126 points higher at 17,710, as the Fed minutes have put a spring in traders' steps. The boost in yesterday’s ADP numbers bodes well for the much awaited non-farms jobs report tomorrow.