Markets affected by continued European concerns

European worries continue to rein in any chance of over-exuberance in equity markets, as the FTSE 100 edges 10 points higher in the first couple of hours’ trading.  

Source: Bloomberg

This morning’s Taylor Wimpey trading update highlights the optimism that the company has for the year ahead. This isn’t a surprise with house sales up 6% and average property values up 11%, coupled with a record order book. CEO Pete Redfern believes that the low interest rate outlook and the lower rate of price growth will provide a more sustainable housing market.

Following the disruption of 2014 Shire has started 2015 in a sprightly fashion, announcing the acquisition of US biotech firm NPS Pharmaceuticals for $5.2 billion. Not only should this acquisition boost the company’s operational strength but it will also help ward off any other lingering suitors.

The Labour party’s announcement that it would give energy watchdogs the powers to force suppliers to lower prices has given SSE, Centrica and others in the sector a thump as prices squeeze lower.

Oil prices have taken another step towards the Saudi oil minister’s prophetic statement about the $40 level, as Oil - Brent Crude has now moved below $49 a barrel. With every panicked reaction to these oil prices moving lower, we are seeing a little life being breathed back into the gold price as it explores the ground above $1230 and even threatens to move into short-term overbought territory.

Europe still remains a breeding ground for stability issues with events in France shocking the world and with the political rhetoric being cranked up in Greece, suggesting that there are more questions than answers in this region. One consolation for those traders hoping for a little sanity to prevail is the almost non-existent economic releases for the day.

Regardless of how strong Friday’s non-farm payrolls were, and the continuation of the trend in falling unemployment levels, the US equity markets selloff on Friday was a bit disappointing especially as the previous month’s revision was upwards from an already high level. Envious eyes from Europe will be wondering what exactly the US markets were hoping for. The answer is probably some good news from Europe, for which there is scant hope. 

Ahead of the open we expect the Dow Jones to start 32 points higher at 17,769.

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