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Dovish Draghi fails to delight
A fairly lacklustre start to the trading day with equity indices trading flat to lower despite what could be construed as a very dovish Draghi this morning. The head of the ECB appears determined to fight the disinflationary environment and it seems ever more likely that negative interest rates will prevail in the near term.

A lower euro against both the dollar and the pound has been the result but any upside effects on Eurozone indices has thus far been elusive. Later sees the release of the Eurozone consumer confidence number, and it would appear that Draghi is already in the know on this print. The consensus is for a marginal move back from -8 to -7 but given the events of the past week, it could well continue a path below the prior number.

Later this morning we get to hear what the Deutsche Bundesbank president Jens Weidmann has to say on the situation. Often viewed as one of the more hawkish members of the ECB governing council

Further evidence that the UK progress on reducing the budget deficit is slow came this morning. Public sector net borrowing of the economy over the first six months of the fiscal year shows that the current run rate is behind schedule to meet the 2015/16 target and despite rising revenues. Public borrowing rose to 8.2 billion pounds in October from 7.1 billion pounds a year earlier. Osborne’s aim to cut the deficit this year to £69.5b (3.7% of GDP) is now beginning to look like a fairly difficult task.

The FTSE remains capped by the 6400 level and we’ve had little in the way of corporate data this morning although a host of broker rating changes have made their mark. Kepler Cheuvreux cut it’s rating on Easyjet to ‘reduce’ stating that the increase in competition is likely to impact operating margins in 2016. The shares have fallen 3.62%.

BAE Systems (+0.89%) has benefited from an upgrade from Investec. The UK defence review next week in light of recent terrorist attacks will likely limit the downside for defence budgets.

More chatter that Imperial Tobacco will be subjected to a takeover, this time British American Tobacco is the potential buyer, has seen the share price rise 2% this morning. Lonmin, giving credence to the phrase ‘rising from a very low base’’ is up 38% - shareholders have approved its deeply discounted rights issue, paving the way for the platinum miner to raise more than $400m and stave off financial collapse.
Barclays (-2%) has been cut to equal weight at Morgan Stanley. Impending regulatory changes in UK banks’ dividends policies are likely to impact negatively.