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Oil gains. FTSE oscillates 6200

The FOMC minutes revealed some hawkish opposition among the members, but the majority preferred to sit on the safe, dovish side of the bench. This was not the case for Bullard, who insisted that the FOMC has reserved rights to move at any meeting. On the flip side, the majority of officials wanted to avoid sending wrong messages to the market. The dominant force in the Fed’s policy making is volatility and global risks against the domestic risks of inflation and employment. In this context, the market gives nearly no probability for an April action from the Fed and thus the market now looks to sell the greenback for now.

Other drivers abound in the FX space, the pound is vulnerable to rising Brexit shenanigans but remains for now above the $1.40 level. Against the euro, it looks even more shaky with the 0.81 level already breached.

Bloomberg reported that if Britain decides to leave the European Union, ‘a corner of the credit market may depart with it and European banks could be left having to replace as much as 108 billion euros ($123 billion) of securities’. JP Morgan CEO Dimon warned against the pending risks, saying that even in the best-case scenario, years of uncertainty could be ahead of us.

The focus later this afternoon will be trained on Mario Draghi. Monetary policy has driven yields on government to record lows but inflation remains an issue. Likewise the recent volatility in equity markets has unnerved investors and the expected spill over effects of QE has not benefited European indices all that much.

A divided Fed for sure but investors seem to have taken the minutes as positive for risk assets. The big 4.5m barrel draws in oil inventory data from both the API and EIA yesterday was the real precursor to upside action though. As stated many times this year, equities are at the mercy of oil prices so any positive sign that the supply glut is diminishing is taken as a beacon of light. We still have the April meeting in Doha to contend with so we can still expect a degree of choppiness in the oil market in the run up that will no doubt make its mark on risk sentiment.
Oil companies are clearly benefitting from this short term change of fortunes.

Shell (+1.26%)
BP (+0.84%)

A number of companies trade ex-div this morning. Lloyds (-1.97%), Aviva (-1.92%), Pearson (-6.62%), GKN (-0.74%), SJP(-0.66%), Rexam (-1.57%) and Taylor Wimpey (-0.67%). This drags 8 points from the index.

Mining stocks are benefitting from the lift higher in commodity prices.  The FTSE has challenged the 6200 level already but seems reluctant to push higher for now.

Astrazeneca (2.51%) the M&A watch continues and now with the Allergan deal off the table, many will speculate as to what Pfizer might do next. A possible interest in Astrazeneca or GSK is now front and centre for those wanting to front run any approach. The thing is, Pfizer already tried to approach Astra a couple of years ago to no avail.

M&S (+1.81%) Sales in the clothing and home arm fell by 2.7% on a like-for-like basis in the 13 weeks to 26 March. On food, M&S said that like-for-like sales were unchanged, but that thanks to the opening of 80 new stores during the year it had seen its market share grow to 4.3%.

Sainsbury (+1.64%) raised to outperform at Credit Suisse.

We call the Dow 30 points lower to 17685.