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European indices flat ahead of FOMC

Corporate earnings reports continue to flow yet it’s all a little restrained in risk assets this morning as traders stand by for the latest FOMC rate decision. If recent weakness in the greenback is to be believed and borne out, a more dovish Fed is the likely catalyst as both macro data and corporate earnings in the US provide mixed messages on the state of the economy. The dollar index is making its way back towards the 94.00 support level – any indication that this will break with conviction in the aftermath of the statement could change sentiment towards stocks and may well give equity indices a boost.,

Risk appetite in Asia was fairly  limited too. The Nikkei closed down 0.36%.  Consumer prices in Australia unexpectedly fell 0.2% q/q against the consensuse for a 0.2% gain. As one mnight expect, this has led to to some agreesive Aussie dollar selling and we might see AUDUSD continue to slide should the Fed surprise the market with hawkish rhetoric.

Safe havens remain key and gold prices have succeeded in crossing the 200 hour MA which could be a precursor for additional upside in line with the 1.13% gain in silver prices.

Cable is consolidating gains well above the 1.45 mark after hitting 1.4637, its highest level since March 2nd  . Funds are currently lowering their Brexit-related short bets yet we shall not rule out the risk of a rapid bearish reversal in sterling positions. UK GDP came in as expected,  preliminary official data showed the economy expanded by 0.4% in the 3 months ended March 31. Softer than the previous quarterly 0.6% gain, the y/y figure was slightly better than forecast coming in at 2.1%.

Big day for European earnings and yet the FTSE trades flat with miners once again taking the brunt of the downside. It would seem the recent rise in iron ore prices - a near 50% rise year to date- is built on sand. It has come mainly on the back rapidly rising steel prices in China – up by a fifth just in April with massive trade volume – coupled with a reduction in output from domestic miners met by a flood of new supply from Australia and Brazil. We may be in for a nasty ride down from here.
BHP Billiton (-1.72%) Rio Tinto (-1.7%)

The looming spectre of the EU referendum in June is starting to impact the house building sector. Foxtons (-2.42%) has become the latest property market player to warn of a challenging climate in the run-up to June’s vote on the UK’s EU membership

Standard Chartered (-2.78%)
has given back some of yesterday’s fairly chunky gains. UBS has put a sell downgrade on the stock with a new PT of 430p from 450p.

Barclays (+2.96%)
off hits early highs but the company has taken the baton from StanChart and managed to rise through 180p for the first time since early February despite a fairly rubbish earnings report. It reported a 25% drop in profits for the first quarter of the year, mainly due to a weak performance in its investment banking division and said bad loans and operating costs had risen. Upbeat comments from the CEO, Jes Staley that the bank has made ‘good progress’- keeping investors happy for now.

Worldpay (+2.79%) UBS sees the recent decline in share price as an opportunity – raised to buy v neutral.

Informa (+1.52%) raised to overweight at Barclays.

BP plc (+0.55%) oil prices have pushed higher overnight and remain at 2016 highs – soft dollar and news that US inventories possibly decreased by 1.1m barrels last week is keeping the elevation in play. Crude oil inventories scheduled for release at 3.30pm.

We call the Dow Jones higher by 67 points to 17967.