Traders await FOMC statement

Tonight’s Federal Open Market Committee statement is a welcome distraction for European traders numbed by the constant focus on Greek issues.

US traders
Source: Bloomberg

Soft Asian markets have not weighed too heavily on European traders who will find it difficult not to focus on this evening, not as they wish the day away but due to the importance that will be attached to the phraseology of the latest US FOMC statement. A fresh poll yesterday morning indicated that the City’s perceived wisdom now had the starting point for US interest rate rises pushed back to September, and tonight’s statement will demonstrate how close that thinking is to the truth.

The relegation of Greek finance minister Yanis Varoufakis from the latest Greek negotiation team suggests that the growing unease around Europe of his confrontational style has finally been taken on board by Syriza, while at the same time no doubt enhancing his cult status back home.

We are now being bombarded with quarterly figures from European companies and the width and breadth of the sectors covered today do give an insight into how the corporate arena is handling the current economic climate.

As reliable as night following day the latest UK bank, in this case Barclays, has had to increase its provisions for a plethora of historical litigious cases, FX and PPI mis-selling mistermeaners. As unsurprising as this might be it has rather taken the shine off the better-than-expected 9% increase in pre-tax profits that CEO Anthony Jenkins has been able to post, ensuring that there is still plenty of work required in polishing up the banks tarnished reputation.

Milder weather conditions have allowed Next to launch its summer catalogue a little earlier than usual, and this has contributed to edging the clothes retailer’s first-quarter figures ahead of expectations.

In contrast to the template so frequently seen from Home Retail Group it looks like Homebase and not Argos has been doing most of the heavy lifting. Regardless of how challenging the first-half might have been profits have still been increased by 14% on an annual basis.

The irony that a micro blogging website discovered Twitter's Q1 figures ahead of its official release later in the week and decided to tweet them will have been lost on few. As disappointing as the news was that the growth in new monthly users was slower than anticipated, the market decided to show no mercy in knocking the shares down by 18.2% before the close. This drop wiped out the 18% that the company’s shares had risen over the course of 2015.

We have now passed the halfway mark in the US reporting season and at present just over 70% of S&P 500 companies that have reported have beaten EPS estimates, this fact once again triggering the debate over how high the institutional analysts' hurdles have been set.

Ahead of the open we expect the Dow Jones to start 13 points higher at 18,123.

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