Panicked utilities anchor FTSE

Utilities, reacting to an increased chance of tighter regulation, have dampened the FTSE, while European equity markets continue to head higher. 

Source: Bloomberg

As the first week of the new European Central Bank quantitative easing scheme draws to a close, the movement of the DAX clearly highlights the benefits that equity markets have enjoyed. The flip side of that coin is the battering endured by the euro, as illustrated by the collapse in EUR/USD

The disquiet felt between Greek finance minister Yanis Varoufakis and his German counterpart Wolfgang Schäuble is no longer being kept behind closed doors. The bickering has now resulted in a formal complaint from Greece, following the German minister's reference to his Greek colleague's 'foolishly naïve' handling of the press. 

Utilities have been squeezed lower this morning due to Ed Miliband turning his attention away from debates and towards offering greater powers to energy regulators. Next week’s UK budget should see the City’s attention finally switch away from Europe and onto the looming May election. The IG election trades suggest a hung parliament leading to a David Cameron-led coalition government, along with the SNP picking up 42 of the 59 Scottish seats on offer. The 16.5% chance that Alex Salmond could then find a seat in the cabinet doesn’t seem that outrageous. 

J D Wetherspoons appears to have turned its attention to the coffee and breakfast market, aiming to triple sales over the next 18 months as the company’s pre-tax profits growth has stalled. Whitbread leads the FTSE leaderboard, as a number of institutional analysts have now upgraded their price targets for the company following an encouraging trading statement. 

The strength of the US dollar is becoming more of an issue for the Federal Reserve as both GBP/USD and EUR/USD have squeezed lower in overnight trading, setting yet more lows. The perception that EUR/USD will hit parity is no longer an 'if' but only a 'when'. The effects of yesterday’s speech from Bank of England governor Mark Carney are still being felt; GBP/USD continues to fall as markets anticipate yet more delay to a rise in UK interest rates.

Ahead of the open we expect the Dow Jones to start 9 points lower at 17,904.

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