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Groundhog day- miners lead FTSE lower
Last week’s surge in equities on the BoJ negative rate decision was confounding but is essentially old news this week. It would seem that central bank impact is really beginning to lose its charm and the days of buying the dip on the back of stimulus expectations is no longer the winning strategy it once was.

We’re back to the same old story today with materials and energy providing a drag on the FTSE as BP delivered what was frankly a terrible set of results – its worst loss in 20 years.

Adding insult to injury, oil prices are 1.50% lower this morning, with downside momentum and basic economic fundamentals all conspiring to ensure that it will revisit the $30 support in the near term.

Even a minor bounce in copper prices to $2.08/lb has failed to give the mining sector a boost this morning and now the FTSE is back below the 6000 level as the ratings cut on BHP Billiton invites investor caution towards the sector.

All capital flow seems bent on heading towards the safer defensive sectors with IT, utilities and healthcare faring better than the cyclicals in early trade. Eurozone bonds are also in demand which is only exacerbating the issue as the euro pushes higher against the dollar despite the ECB’s dovish refrains. The Dax is lower by 1.14% (-111 points).

BP (-6.72%) Given that oil prices have fallen by 25% since the beginning of this year alone, it’s no surprise that BP reported sharp decline in underlying operating profit for the full year (2015). Annual profit fell 51% year-on-year to $5.9bn (£4.1bn), while underlying operating cash flow plunged 38% compared with the corresponding period a year earlier to $32.8bn.

Shell (-1.94%) is being dragged down in sympathy but not many are upbeat about the set of results it is set to post later this week.

BHP Billiton (-3.78%) credit rating at S&P on lower price forecasts. Lowered from A+ to A.

Ocado (+8.24%) posted its second consecutive year of full year profits before tax, with earnings rising 65% to £11.9m, on revenue up 17 per cent to £1.1bn. Ocado also built on its customer base from last year.

Hikma Pharma (+2.76%) Raised to buy from Neutral at BOFAML

Sports Direct (+2%) Down 48% from the August highs, someone had to find value as it plummeted to all-time lows. Raised to overweight at Morgan Stanley

Sainsbury (+2%) agreed to buy Home Retail for $1.9bn (1614.3p/shr). The offer represents a 63% premium to Home Retail's (-1.24%) share price on 4 January.

We expect the Dow to open down by 160 points to 16280.