Yesterday’s triple-digit falls seen in European equity markets appear to have been quickly forgotten, with many viewing this as a buying opportunity rather than a precursor to tougher times.
Mario Draghi’s speech will have raised a few eyebrows this morning, and as encouraging as it is to hear the central bank’s head talk about the success of the eurozone’s quantitative easing process, two days in is far too early to be celebrating its success.
Regardless of how many people Yanis Varoufakis has rubbed up the wrong way with his combative manner, Greece has now received €555 million from the central bank’s rescue fund. This will not be enough to meet its commitments for the month but it does relieve the pressure on SYRIZA in the short term.
Hikma Pharmaceuticals, the company poised to take over Tullow Oil’s position in the FTSE 100, gave investors a flavour of what to expect as it posted full-year pre-tax profits up by 21% in the year, giving credibility to the 26% increase the shares have enjoyed since December. Part of this impressive move can be attributed to the fact that 54% of the company’s revenue is from its US markets and only 6% from Europe.
UK-based recruitment firm Michael Page has posted pre-tax profits up 17%, but most heartening is that part of the driving force behind this improvement has been the increase in permanent jobs in the UK market.
Companies heavily exposed to the commodity markets bore the brunt of yesterday’s sell off and, in most instances, are enjoying a more measured market response today; this has not been the case for BG Group. After owning the title of yesterday’s biggest faller, down by almost 7%, it has dropped by another 1.6% in the morning session.
Currency markets continue to cause havoc with the equity markets, as the relentless strength of the dollar continues to raise the spectre of US corporates struggling under the ‘currency headwinds’ ailment that many European companies have complained about for some time.
Having seen a number of institutions call for parity in EUR/USD at the beginning of the year, we have already seen revised levels being posted and one bank’s call yesterday for $0.8500 by 2017 looks unlikely to remain an isolated expectation for too long.
Ahead of the open we expect the Dow Jones to start 44 points higher at 17.730.