The short to medium-term outlook for the UK interest rate continues to look stable as the 9-0 voting of the Monetary Policy Committee members in favour of keeping the base rate at historically low levels shows no sign of changing.
Stability is however in short supply in mainland Europe, as once again Greek finance minister Yanis Varoufakis has been reliably aggressive in his comments about who would be most impacted should Greece be forced to default on its debt repayments in the coming weeks.
The dollar looks to be reasserting its dominance against both the euro and sterling, but with the Federal Open Market Committee meeting minutes due for release tonight this balance of power could yet again come into question.
As ever the markets have focused on the forward guidance and ignored the better-than-expected numbers from Burberry. It is all well and good seeing last year’s pre-tax profits increase by 7%, but when that is accompanied by ‘increased uncertainty’ statements from the CEO the markets will always focus on the negatives.
When you consider the expectations of further M&A activity in the telecommunications sector, it is hard to believe that Liberty Global’s chairman John Malone wasn’t conscious of the reaction his ‘Vodafone would be a great fit’ comments would make.
Today has seen the long-awaited confirmation that Marks & Spencer is beginning to see some tangible results from its three-year turnaround plan.
Markets will also be keeping an eye on the banks with US regulators due to announce their findings and fines from their investigation of the FX markets. Worryingly for the banks the size of these fines now tend to be measured in the billions rather than millions.
The feeling from the US is not so much a stalling recovery as one that is making cautious headway. The release of the latest minutes from the FOMC’s meeting will offer the markets an ability to see how the voting members’ enthusiasm for change has been affected. The last month’s weakness in the dollar will have come as a welcome break, but the suspicion that this bullish trend will once again re-emerge will no doubt be tempering members thinking.
Ahead of the open we expect the Dow Jones to start 24 points lower at 18,288.