The morning after the day before

Markets are looking much cheerier this morning, with the FTSE 90 points higher and triple-digit gains across Europe.

ECB building
Source: Bloomberg

The CAC and the DAX have both climbed almost 2% in early trading, broadly back to their pre-speech levels and even the FTSE, the European laggard, is up by 1.3%. The chaos of yesterday has subsided as traders have come back into the office having had a little more time to digest all the changes Mario Draghi introduced. It’s amazing what the concept of an extra €20 billion of quantitative easing (QE) working its way into the markets on a monthly basis can do for confidence.

Currently 90% of Eurostoxx companies are trading having hit four-week highs, however it is also true to say only 20% of companies in the index are currently trading above their 200-day moving averages. Expectations had been high, and to be fair, the European Central Bank (ECB) delivered at the top of the range. Traders though are a cynical bunch, and the extent of stimulus measures was taken as a signal of how worried the ECB was about the current state of affairs  in Europe, as opposed to how determined it was to help improve the outlook. 

The announcement that some corporate debt would be added to the basket of eligible debt purchases for the current ECB QE scheme has seen the banking boosted, jumping by 4.12% in the EuroStoxx and by 2.5% in the FTSE.

Tim Martin continues to be the most vocal mouthpiece for the pub sector as the CEO of JD Wetherspoon has once again highlighted the discrepancies between the taxation of pubs and supermarkets when selling alcohol. The 9.4% increase in its tax bill is taking the lion’s share of the blame for falling first-half profits. 

Gold enjoyed a flurry of excitement in overnight Asian trading, hitting an intraday high of $1284 giving fresh conviction to gold bugs’ hopes that the metal can make its way up to the 2015 highs of $1307. Moments of panic as seen yesterday are just the thing to keep the flight to security thinking fresh in investors’ minds. Once again, oil prices are on a surge with WTI and Brent crude straddling the $40 level and confirming their somewhat surprising bond with equity market strength.

FTSE risers and fallers (as of 9.30am)

Company % change Index points
Royal Dutch Shell A +2.08 +5.58
Royal Dutch Shell B +2.22 +5.33
BP +2.1 +5.12
British American Tobacco +1.73 +5.01
Barclays +4.47 +4.67

 

Company % change Index points
Old Mutual -1.78 -0.63
Marks & Spencer Group -1.99 -0.52

The day ahead

Economic data:

1.30pm – Canada employment change (February) and unemployment rate (February): the employment change is tipped to rise by 11,700 and that compares with a decline of 5,700 in January. Unemployment is anticipated to remain at 7.2%.

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