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The London market has pushed through the 6600 mark as pace gathers behind quantitative easing speculation from the European Central Bank on Thursday. We are two days away from Mario Draghi’s announcement and traders’ excitement can hardly be contained.
Markets broadly ignored the downgrade to global growth by the IMF, partly because of the ECB meeting and partly because the World Bank's warning has rather stolen the IMF's thunder. The warning shot from the IMF about the world economy will however put pressure on Mario Draghi to pull the trigger on QE.
The London mining sector breathed a sigh of relief after Chinese GDP figures exceeded analysts’ expectations, but the long-term downward trend still holds and the natural resources sector will keep declining as the Asian giant cools off.
Rio Tinto is in the red after the mining giant ramped up its production of iron ore even though the metal is at a five-year low. Although the miner is trimming production rates across the majority of its minerals to combat crumbling commodity prices, it is still operating in markets where glut, rather than drought, is the order of things. The company will attempt to keep shareholders sweet by increasing its dividend next month in an effort to fend off Glencore’s unwanted advances, but the Swiss-based miner won’t back down without a fight.
Unilever had a poor finish to a difficult year as weak demand from emerging markets led to its weakest sales growth in over a decade. The consumer goods company produces many well-known household names like Marmite, but traders generally inclined towards hating, rather than loving, the numbers this morning. What is even more disappointing is the outlook, and Unilever is set for a repeat this year.
We are expecting the Dow Jones to open 15 points higher, at 17,526, as US traders return to work from the US bank holiday yesterday. With a relatively quiet US calendar today, we can expect the QE anticipation to feed across the Atlantic as well.