European markets have continued their positive start to March this morning as Asia markets shrugged off a Moody’s ratings downgrade of China’s economic outlook to negative, raising the question as to why markets place any relevance to the output of these beleaguered and discredited organisations. The FTSE100 is just shy of the 6,200 level as it looks to post its fifth successive day of gains, and its best run this year. The Nikkei 225 surged 4% on the back of a weaker yen.Once again the best performers have been the financials and basic resources led by Anglo American and BHP Billiton, with Anglo American at its highest levels since November.
The continued recovery in the banking sector has seen Lloyds Banking Group shares move back closer to its 73.6p level breakeven price, increasing the prospects that we could well see the government look to pare down its remaining stake in the bailed out bank.
LSE shares have started to see some of yesterday’s post ICE gains start to melt away after the head of Deutsche Boerse Carsten Kengeter reinforced his determination to see the merger through.
ITV shares have also slipped back despite posting an increase in pre-tax profits to £641m, and paying a special dividend. It would appear that a drop in viewing numbers on its main ITV channel has raised concerns that despite rising advertising revenues the company is losing market share. The advertising outlook continues to remain positive particularly with the football European Championships coming up.
US stocks kicked off March on the front foot, posting one of their best sessions this year, driven higher by financials and basic resource stocks, as the recent rebounds in commodity prices continued to drive sentiment, along with some evidence that the worst of the US manufacturing slump could well be coming to an end. A pickup in US auto sales has also raised confidence that the US consumer is starting to loosen the shackles on the purse strings after a lengthy period of caution.
Today’s main focus for US markets is likely to be the latest ADP Employment report for February and the Fed’s Beige Book of economic conditions.
Of particular interest will be the latest Federal Reserve Beige Book, simply because it should give a broad overview of the US economy for the key Fed regions. Given that the New York President William Dudley expressed some concern about a slowing of US growth earlier this week, today’s report could offer up some important clues as to what the FOMC might do at its next rate meeting on the 16th March, and how much economic conditions have deteriorated since the last report in November.
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