Market Comments

European equity markets have spent weeks discounting equities due to Greek fears, but this morning look to be more focused on the QE positives as last week’s losses are steadily eroded.

So much for the markets enjoying a respite from worrying about Greece. Once again the inability of Syriza to outline plans that can calm the nerves of the IMF and the ECB has seen the Greek index come under renewed pressure, as speculation that it has not done enough to warrant receiving its next tranche of bailout funding grips the market. With greater exposure to the whims of the commodity market the FTSE is once again struggling to keep up with more sprightly European equities. The official start to the UK general election campaign has seen the focus shift a little more inwardly. Which party will come out on top in May is still far from clear, as the IG general election binary still indicates an 83% chance of no overall majority.

This weekend’s revelations that an almost 11% stake in Holcim, held by Russian investors, is opposed to the current terms for the deal with Lafarge must give CRH the feeling that it is stuck in a soap opera with more false finishes than EastEnders. Rolls-Royce has been boosted by the news that Air China has chosen it as its engine supplier for its new fleet of Boeing 787 Dreamliners. The collapse of Kingfisher's deal to acquire French home improvement firm Bricolage in a €275 million deal has been welcomed by traders, forcing the stock to the top of the FTSE climbers list. With current local elections pointing to Francois Hollande looking even weaker the markets have clearly shown that less exposure to the struggling French market is no bad thing.

Fed chair Janet Yellen's speech on Friday was as ambiguous as ever leaving the markets with more questions than answers as to when and what the FOMC would do later in the year. The QE-driven European equity markets look to have taken the lead and US futures are indicating all three of the major indices will open higher this afternoon. Ahead of the open we expect the Dow Jones to start 127 points above Fridy's close, at 17,839.

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