Soft start ahead of FOMC meeting

An expectation that the Federal Reserve will subtract an additional $10 billion from the current quantitative easing programme has led to a notably softer start in European trade today.

The possibility that the sanctions on Ukraine will be ramped up in the near-term is lending a slight vulnerability to upside gains in equity indices. There is still a sense of relief in the market that the sanctions were individual rather than economically based, so the safe haven of gold is less in demand. This retracement in the gold price to $1363/oz has pushed the mining sector back into the red, with Fresnillo down over 5%.

Corporate earnings and trading updates have provided a mixed bag today, too. Sainsbury's snapped its nine-year run of quarterly sales growth. The company has blamed a fall in food prices and unseasonable weather for the 3.1% decline in sales. In reality, British supermarkets are suffering at the hands of the German budget stores; Aldi and Lidl continue to grab market share in a very competitive sector. Aldi in particular has seen its revenue increase 34% in the past year, boosting its market share to 4.3% from 3.3% in the same period.

Adverse currency movements, specifically the weak Australian dollar, have been blamed for the slowing second-quarter sales growth in online fashion retailer ASOS. Despite revenue advancing some 26% in the first two months of the year, sales growth declined to 38% in the four months through December. Expectations were perhaps a touch too high for the company's earnings, and the shares have dropped back dramatically by 16% this morning. The news has also negatively impacted fashion heavyweight Next, due to report its first-quarter earnings on Thursday, the stock has fallen 1.5% with investors sizing up the potential for a disappointment.

The appetite for stock market IPOs in the UK is heating up, with online takeaway service provider Just Eat joining the likes of Poundland and Pets at Home in a bid to raise capital through flotation.

Easily the largest planned listing since Facebook, Alibaba has declared ‘open sesame’ with its plans to go public on a US stock exchange. Alibaba is one of the world’s biggest internet companies, and will almost certainly attract the same level of hype witnessed around the Twitter IPO last year. There is already strong demand for IG’s grey market on the flotation. Clients have pushed the price to $230 billion – well above the current market capitalisation expectations of around $150 billion.

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