UK Market Comments

A potentially momentous day for the UK dawns, reflected in the fact that the FTSE is barely ten points higher while European markets ascend.

The polls are finished, the politicians are silent at last (although Andy Murray isn’t) and now all we can do is wait. 307 years of union boils down to one day of voting. Even now, however, the IG binary continues to move, showing a further swing towards ‘No’. EasyJet’s optimism for the year ahead has been underlined with the confirmation that it has placed an order for 27 new planes with Airbus. High street fashion chain French Connection has seen its shares tumble even though losses have reduced and the order book for its 2014 winter range is looking stronger. Taking second fiddle with UK traders is this morning’s eurozone targeted LTRO releases, one of the key tools the European Central Bank has employed to kick-start the eurozone economies. Arguably more beneficial to European equity markets is the cyclical change to the ECB’s governing council leading to the absence of a Bundesbank representative, meaning QE might be easier to pass through.

Yesterday saw confirmation that the Fed has trimmed a further $10 billion from its monthly bond-buying programme and looks set to cut the final tranche next month. Janet Yellen again dodged the timeline questions, but as both the employment and inflation levels edge closer to perceived targets speculation over when they will raise interest rates intensifies. Alibaba looks set to be crowned the 'new' largest ever US IPO later today. This follows a particularly positive road show that has resulted in its equity being heavily oversubscribed by US investors.

Ahead of the open we expect the Dow Jones to start 24 points lower at 17,113.