Market Comments

Markets aim higher as weak data fails to stifle the dip buyers.

UK markets

The FTSE 100 has batted off suggestions that weakness in the Chinese economy would provide further downside on what has largely been a mixed week thus far. With the retail sector leading the way, record intraday highs reached at the European open point to a market where any weakness is perceived as an opportunity to buy in at a better price. 'Buy the dips' appears to remain the go-to European mentality for the time being.

Today's centrepiece from the ECB did promise to be something of a drab affair given the recent implementation of a QE ace card on top of Mario Draghi's already full house - however an impromptu interruption to proceedings, which saw Mr Draghi unceremoniously covered in a mix of feminist propaganda and confetti, delivered the unpredictability that many had feared would be missing. Unfortunately the main event itself failed to live up to the matinee, with a clear focus on providing stability following the decision to implement QE last month. Fears of a lack of supply in government bond markets, along with a possible early exit ofthe programme, were dismissed as premature. Given the length of time the likes of the US spent employing their own QE programmes, it is hard to disagree.

The retail sector provided the greatest proportion of today's gains in the FTSE 100, with Sports Direct and Next helping the flagship index on its way. This activitycontinued across the FTSE 250 index, where JD Sports reported a 22% rise in pre-tax profits. The overall improvement in turnover, pre-tax profit, earnings-per-share and dividend-per-share signalled a very positive year of trading for the company.

US markets

Dow bulls appear to be holding on tight as the US index charges higher in an attempt to move back towards the 18284 high. The ability of US markets to brush off both yesterday's disappointing retail sales number and today's weaker-than-expected industrial production and manufacturing survey figures speaks volumes about the state of current investor sentiment. Either traders want to buy into the bull market regardless of poor data, or they see weak economic indicators as a sign that monetary policy will be accomodative for longer. Most likely both hold true, which no doubt signals a longstanding and, to some extent, unhealthy bull market.

M&A activity was back in the news today, with Nokia reaffirming a deal for Alcatel-Lucent with $16.5 billion. Unfortunately for shareholders of the latter, many of the gains realised yesterday have been eroded following the announcement that it will be an all-share deal. This is likely to largely be thanks to the somewhat tarnished reputation Nokia has had in recent years, during it's demise in the smart phone revolution. That being said, today's announcement will no doubt ensure that M&A remains front and centre at a time when many are contemplating the impact these deals will make to industry structure and bank profitability going forward. Elsewhere, the Bank of America followed on from JP Morgan in posting a strong set of results, moving back into profitability following a $276 million loss in the same period last year. However, at $0.27, BoA's EPS still fell marginally short of median estimates, which, when set against a 6% fall in revenue, accounted for the negative open to today's trading.

Commodities

WTI's attempts to break above the $55 breakout marker were helped no end by yet another entirely unexpected shock in US crude oil inventories. Following on from last week's 80-year high, today's figure represented the lowest level of inventories in 2015. Today's number brings some credibility to the continued story of lowered investment within the US oil and gas sector, which was largely put to bed by last week's abnormally high inventories number.

FX

Today's surprise crude oil inventories number boosted the Canadian dollar, which gained over 1% against the US dollar following the announcement. Unsurpisingly, any volatility in EUR/USD off the back of today's ECB announcement has been minimal. However, with much of yesterdays gains having been eroded, the price remains just 130 points short of that 12-year low that the markets are waiting for.