Earnings to break market deadlock

A mixed picture prevails in mid-morning trading, as investors ready themselves for US bank earnings this afternoon.

-       FTSE edges up but Europe falters
-       JustEat consumes its rival
-       JPMorgan and Citigroup on the afternoon agenda

Traders continue to find more interest in watching paint dry than following market moves, as the FTSE nudges higher while European markets drop back slightly. Neither the buyers nor the sellers seem able to gain a lasting advantage, with the lack of concrete newsflow not helping matters. The dollar is modestly higher however thanks to last night’s Fed minutes that point broadly to a continuation of the tightening policy, even if not all members are fully convinced of the need to press on after another hike in December. Investors in Just Eat however are certainly happy to keep watching the shares, as the stock hits a fresh all-time high. Its alliance with smaller rival Hungryhouse has been given primary clearance; despite a hefty earnings multiple of 60, there seems to be no shortage of investors willing to order the shares, with the key ‘takeaway’ being its exposure to a London market that seems ripe for further expansion and relatively immune from consumer spending worries.

At last, earnings season is upon us in earnest. JPMorgan and Citigroup herald the arrival of an avalanche of numbers that will allow investors to see whether the latest run-up in equity markets is backed up by company performance. More than anything else this week, the beginning of the Q3 reporting period should be credited with keeping equity markets in check. While some weakness is to be expected as the numbers filter through in coming weeks, it would take a truly abysmal season to disrupt the pre-Christmas rally. Ahead of the open, we expect the Dow to start at 22,856, down 16 points from Wednesday’s close.