UK Market Comments

The greatest economic experiment in central banking history was brought to a close last night by the US Federal Reserve, complete with suitably dovish rhetoric about the future path of interest rates. US markets staged a modest decline by the close, but finished well off their lows. We cannot hide from the fact that such dovish commentary is in part designed to keep a degree of order over capital markets, after the uptick in volatility seen since the start of the autumn. European markets are not impressed, although this is entirely to do with their own problems, and pressure continues to mount on the ECB to resurrect QE in a multilingual European form. European equities are lower thanks to comments from the chief of the European Banking Authority that the banking stress tests are not foolproof; something we all knew but were kind of hoping nobody really important would draw attention too. Cue downside auctions in peripheral banks, especially Italy. Regional CPI data from Germany had shown further month-on-month deflation, rather taking the shine of an unexpected fall in unemployment. We could see a tricky end to the month here with quite a lot on the agenda before the weekend, with Janet Yellen speaking today as well.

UK equity watchers have some big names to delve into today, with the overall market weaker by 55 points, trading around the 6400 level. Barclays (+0.5%) is holding up well as the market lives lower. Underlying performance is on the right track, but further fine provisions take some shine off the numbers. Shell (-1.5%) is shrugging off what it has called the 'volatility in our industry' (lower oil prices to the rest of us) with a good set of quarterly numbers. Somewhat surprisingly BT (-3.3%) is suffering this morning, a dividend hike and better profits thanks to premium broadband subscriptions. The stock has closely hugged the FTSE this year and is giving away gains recouped since the mid-month falls, moving closer to a YTD low around £3.50.