Markets charge higher

European equity markets have flown as the day has progressed, but much like Icarus have they flown too close to the sun and will tomorrow result in a fall?

Source: Bloomberg

As the day has progressed equity markets have steadily improved and as US equity markets have started trading, European equity indices have by and large jumped by 2.5%.

The FTSE 100 is once again tasting the rarified air above the 6000 level. A note of caution should be expressed with these good moves however, as equity volumes for the FTSE remain particularly low at only two-thirds of last week’s trading.

Comments from European Central Bank member Ewald Nowotny highlighted the worry that market expectations could once more be running away from reality ahead of the March meeting. A rate cut is likely to be the only move by the committee and with polls pointing towards a 50% expectation of a rise in asset purchases, we could see another re-run of December’s meeting which saw markets hugely disappointed despite ECB action.

However, the one big difference is that we have not seen the same size of market move ahead of the event so any reaction is likely to be more understated.

Oil markets have again demanded the attention of traders as it has been the turn of Iran and Iraq to evaluate oil production levels. Considering Iran has only just started enjoying life without sanctions it is maybe no surprise it is not leading from the front when it comes to reducing production. As these two nations have seen their market share diminish over the last two decades, it has been the likes of Saudi Arabia who has benefited by taking up the market slack. To date it has shown no inclination to return the favour.

Thursday offers plenty of opportunities for market surprises with Chinese inflation, the start of an EU summit and an extensive list of corporate data releases not to mention reaction to tonight’s FOMC minutes.   

FTSE 100 risers and fallers (as of 4.30pm) 

Company % change Index points
Royal Dutch Shell - A +4.79 +11.53
Royal Dutch Shell - B +4.57 +10.99
BP +3.69 +8.85
Glencore +14.76 +6.91
HSBC Holdings +1.95 +6.66


Company % change Index points
Severn Trent -0.52 -0.1
National Grid -0.02 -0.03

The day ahead

Economic data:

12.30am – Australia employment change and unemployment rate (January): the consensus is for an increase of 34,800 in the employment change, and that compares with the 1,000 decline in December. Unemployment is tipped to fall from 5.8% to 5.7%.

1.30am – China CPI (January): MoM inflation is expected to remain at 0.5% and YoY it is tipped to rise to 1.9% from 1.6%.

1.30pm – US initial jobless claims and Philly Fed manufacturing index (February): jobless claims is anticipated to increase by 7,000 to 276,000. Philly Fed manufacturing index: expected -2.77, prior -3.5.

4pm – US oil inventories: stockpiles are tipped to increase to 1.2 million barrels from -0.754 million barrels.

Corporate reporting:

BAE Systems, Centrica, Rexam, Nestle, Go-Ahead Group, Wal-Mart Stores Inc

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