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Traders await ECB, and Kier soars after strong update

Stock markets in Europe are subdued as traders await the update from the European Central Bank later on. 

The market isn’t expecting any changes to the policy, but the follow up press conference will be closely watched.   

Renishaw has been hit by profit taking after the company posted a 73% increase in first-half profits. The company stated the interim dividend will be 14p, and it anticipates the full-year revenue to be in the region of £575 million to £605 million, and that compares with the first half-revenue of £279.5 million. CEO David McMurty announced yesterday that he will be stepping down, and will be replaced by William Lee next month. Mr McMurty founded the company, but will remain as chairman. The stock is down 10.8% today, but hit an all-time high during the week, and the wider upward trend is likely to continue.

Kier Group shares are up 14% after the company stated it is trading in line with expectations. The construction company is keeping a lid on its debt, and it is stated its net debt for the first-half is less than one times its earnings. The firm managed to pick up new contracts in the wake of the Carillion collapse, and now investors feel more confident in the company’s financial health.

At 12.45pm (UK time) the European Central Bank (ECB) announce their interest rate decision, and traders are not expecting any alternations to the policy. The press conference at 1.30pm (UK time) will be in focus as dealers will get to find out what Mario Draghi, the President of the ECB is thinking. It is likely that he will express concerns for the relatively low level of inflation, in a bid to talk down the value of the euro.

EUR/USD has cooled slightly today after printing a new three-year high yesterday. The Geman IFO business sentiment report ticked up to 117.6 – matching the record high recorded in November. The bullish mood in Germany underlines how strong the strength of the single currency.  

GBP/USD notched up a new 19 month high this morning as the bullish sentiment surrounding sterling is still going strong. Pullbacks in the pound could see fresh buyers enter the fold.

We are expecting the Dow Jones to open up 63 points at 26,315, and we are calling the S&P 500 up 5 points at 2842.

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