Markets await Osborne's statement
The equity markets have been gearing themselves up for the final budget of this coalition, due to be presented tomorrow by chancellor George Osborne. Considering the government will go into Purdah next week as the political parties start their election campaigns, this is likely to be one of the most political budgets ever. Although we have heard a few rumours of some of the possible announcements, the chancellor is sure to leave a few things up his sleeve to add impact. The FTSE 100 has, for a change, benefited from the proportionally large exposure it has to the miners and oil and gas companies as it has added to yesterday’s gains while the rest of Europe has sold off.
Sainsbury’s is looking at the positives as it has proudly stated its expectations of outperforming its sector peers and at the same time has seen underlying sales fall for the fifth quarter in a row. The continued pressure of squeezed margins and a market share being eaten into by the minnows of the food retail sector has seen the company's shareholders grateful for the small mercies.
An increasingly lazy attitude in the UK public for cooking has seen Just Eat post profits up by 62% in the last year as the takeaway company eats into its competitors’ market share.
Tullow Oil has had one of its better days heading up the list of FTSE climbers but as confirmation of its relegation out of the FTSE has already been confirmed, this relief rally is too little too late.
Currency markets eyeing interest rate rise
The ongoing strength of the dollar has begun to take its toll on the US corporate scene as the 'currency headwinds' remark, so prevalent in European company reports, has now made its way across the Atlantic. The start of the two-day FOMC meeting has seen traders debate the likelihood of the word 'patience' being removed from the vocabulary when talking about the start of interest rate rises.
Confirmation that American Airlines was set to join the S&P 500 saw its shares jump by more than 5.5%; an impressive performance for a company that was bankrupt just over a year ago. In stark contrast to that the Dow Jones only has Coca-Cola and Boeing able to forge out a positive move higher as the index is smothered in red.
Gold hovers around $1150
As the possibility of Iranian oil exports no longer being ostracized increases, the pressure on the oversupply of oil markets has seen fresh selling squeezing both US light crude and crude oil back into oversold territory.
Gold continues to lack luster as it hovers around the $1150 mark as the selloff in the precious metal looks to be overdone and running out of steam. Today’s housing starts out of the US have seen a renewed selloff in copper as the American housing market struggles to keep momentum.
Dollar's dominance down
The dollar's dominance of the currency arena has, for the second day, diminished. The fact that both the chancellor George Osborne and the FOMC’s Janet Yellen will be making market-moving statements tomorrow it is possibly no surprise that traders are taking a little of their profits off the table. Considering that institutional expectations are now calling for parity in EUR/USD this year a return to bearish markets will materialise sooner rather than later.