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Markets continue their push higher
Euro area HICP inflation is expected to rise from 0.1% y/y to 0.2% y/y in November with core inflation flat at 1.1% y/y, in line with consensus, markets are still very much expecting that Draghi will pull a rather large rabbit out the hat tomorrow.
There is naturally a risk that the ECB will disappoint with inflation expectations on the up with the 5Y5Y forwards rising steadily to 1.80% and recent manufacturing gauges looking stronger This was borne out yesterday with the euro rising back through 1.06 as traders readied themselves for the possibility of a less than aggressive eventuality.

Crude oil, having failed to break higher over the past number of days despite a small fall back in the greenback does look set to make another move lower this morning.
The weakening of oil prices is currently the most important factor in the ECB's analysis, the drop in oil prices - 60 per cent since mid-2014 and certainly, while we have often seen longer term inflation expectations react to short term movements in oil prices this may well be a temporary elevation so it’s likely that even this won’t prevent Draghi from doing ‘whatever it takes’. Time will tell whether Mr Draghi, in pushing deposit rates into deeper negative territory and extending QE has acted erroneously. Later sees the release of US oil inventories. The consensus estimate for the EIA report is currently for a stock draw of 668.18K barrels. A greater drawdown could bring about a squeeze higher particularly with the OPEC decision on production this coming Friday.

Janet Yellen is also due to speak later this afternoon but we have Lockhart prior to this so we can expect to see a degree of choppiness in both the FX space and equities as traders do their utmost to derive some sense from the rhetoric.

Equity indices are all a touch higher this morning in preparation with the usual suspects, energy and basic resources all underperforming. Anglo American has seen its share price fall below the 400p marker this morning. Already down 70% this year and fresh from a downgrade from HSBC, the mining firm has also lost its battle with Irish billionaire John Magnier and Dubai’s ruler over the firm’s attempts to expand an Australian coal mine near their stud farms.

Shire (+2.24%); AstraZeneca (+1.55%) Financials may have boosted the FTSE yesterday but healthcare seems to be in vogue this morning with the sector outperforming the broader index by a wide margin. Morgan Stanley is behind the move higher for GSK, Shire etc. It also gave an upgrade to AstraZeneca yesterday. The broker believes that US pricing, volatility in EM and possible US rate hikes may offset supportive M&A and pipelines in EU Pharma next year. It also said the sector is fairly priced.

Away from base metals, Fresnillo +1.25% and Randgold +1.47% continue to add gains as the gold price steadies somewhat having bounce doff the $1050/oz support earlier this week


Other equity highlights:

Zoopla (+1.34%) results for the year ending September 30 it is announcing a 34 per cent rise in revenue for £107.6m, plus a 20 per cent increase in profits to £25.4m. Zoopla bought price comparison business uSwitch in June for £160m.

Greene King (+5.4%) recorded pre-tax profit was up 17.9% to 72.0 million pounds ($108.2 million) compared with GBP84.9 million the previous year as total revenue rose to GBP614.9 million from GBP917.7 million a year earlier. In November last year, Greene King agreed a GBP773.6 million offer for Spirit Pub.

Sage Group (-4.77%) An 8% rise in organic group full year operating profits to £380m. Pre-tax profits were down slightly to £275.8m from £278.7m. Software subscription contracts grew to over 690,000, an increase of last year’s 450,000, achieving 28% growth in the annualised value of the software subscriber base to £344m, up from £268m. The shares hit an all-time high this week so we are clearly seeing some profit taking set in.
IAG: (+1.82%) Raised to buy at Charles Stanley. Majority brokers bullish on the stock with average 12 month price target at 727p.
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