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European markets have started the trading day as if it were already the weekend, and the lethargy of the equity markets has done nothing to shift this malaise. Following on from Mark Carney's comments yesterday, sterling and currency markets have been a little more active as the pound has again strengthened against the US dollar, after the Bank of England governor’s insistence that no further quantitative easing was necessary.
European Central Bank president Mario Draghi will be speaking this morning and it will be interesting to see if he strays away from his normal optimistic stance to discuss some of the looming bailout issues that need readdressing.
Royal Mail has confirmed that it will be pricing its IPO between 260p and 330p, which will give the company a market capitalisation of between £2.6 and £3.3 billion. Interestingly, the higher end of that range would be enough to see the company squeeze into the FTSE 100. IG has been running a grey market on this for a couple of weeks, and interest is very much on the buy side, with client trading activity currently assessing fair value at around £3 billion.
The mining sector, with four out of the top five, is prominent in the day’s fallers, even though underlying commodity prices are fractionally higher.
By the end of today the previous 24 hours will have seen Federal Open Market Committee members Jeremy Stein, Esther George, Charles Evans and William Dudley all speak. This is likely to add confusion rather than clarity, one suspects, to the tapering process. The haggling between US president Barack Obama and the Republicans has already started in the public arena, but in order to ensure that the US does not see its debt downgraded again, Mr Obama needs to move quickly. It will be the third time in less than two years that the US will have needed to take action to avoid hitting its debt ceiling and rather than again 'kicking the can down the road', they should really tackle the underlying issues. Ahead of the open, we expect the Dow Jones to start 20 points lower at 15,308.