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Euro indices tread water ahead of NFP
While ECB action was much less dovish than the market expected it does not mean that monetary policy is not accommodative or indeed that the door isn’t open for additional stimulus if necessary. Mario Draghi’s extension of the QE from September 2016 to March 2017 was slightly less aggressive that the market was pricing i.e. an increase in monthly purchases by about 10-to15 billion euro and a deeper cut to the deposit rate. Some could argue that macro data emanating from the Eurozone is not bad enough to warrant what the markets so clearly desired. Germany factory orders today and last month’s upside revision is another case in point.

There is also certainly an element of keeping the powder dry in the face of geopolitical concerns, potential for basing effects on inflation and the possibility that Yellen could take the baton later this month in leading the euro that bit lower against the dollar.
While the market is pricing a 70% chance of a hike this month, should Yellen fail to deliver Draghi may be forced to do more. In her second day of testimony, FOMC Chair Yellen sounded less hawkish as she emphasized a soft normalisation path mostly to prevent the US dollar from getting too strong. However, she has made no comment on the future path of normalisation.

Initial lift off timing is only element now. At this point, it’s all about that pace.

Nevertheless, following the equity selloff in and the fairly extreme bounce back in EURUSD there is an air of caution this morning with European equities trading fairly flat while US futures seem better bid and appear a little more upbeat ahead of the jobs data release later this afternoon.

The consensus for the nonfarm payrolls is a solid 200,000. Even in case of a slight miss, and there is a possibility given the stellar numbers in November, the December rate hike will be kept on the agenda something Janet Yellen was rather explicit about in her testimony. Thus the labour market will not be the barrier to any bottling.

Ex-divs have pared some 6.37 points from the FTSE this morning. Once again, the heady resistance presented around the 6450 levels have held the index back and we now look for the 6250 level to hold if any additional upside is to be considered.

Anglo American (+0.85%) – The plan to slash its dividend is really not so much of a surprise given the slump in commodity prices and the companies aims to cut costs. A dividend cut by U.K.-based Anglo would be the second from a large mining company in recent months

BAE Systems (-0.79%) The British multinational Aerospace and defence group BAE Systems announced a bond issue totalling $1.5 billion

EasyJet (-1.04%) The low-cost airline are looking for a strong finish to a turbulent year as they report a rise in November passenger numbers.

SAB Miller (-0.16%) The acquisition of SABMiller by AB InBev in a $110 billion takeover bid is coming under scrutiny by 23 consumers who have filed a lawsuit in order to stop the takeover which would ultimately create a monopoly in the beer market. Hipster activists exist.

Berkeley Group Holdings (+6.89%) The British property developer have hit year highs today as they expect to hit profit target .

Whitbread (-3.52%) Cut to equalweight at Barclays.

Sage Group (+3.35%) a plethora of broker upgrades has pushed the stock higher with brokers citing increased confidence that management will improve margins and accelerate growth

We call the Dow higher by 80 points.