10h AM

Good Morning!

European shares are trading moderately higher this morning on the back of firmer markets across Asia. Several factors are giving Asian markets are boost this morning with the BOJ confirming that they will be maintaining their economic stimulus and money-market rates in China continue to decline after the PBOC's cash injection yesterday.
There is very little economic data out for the remainder of the week instead traders are likely to continue to focus on US corporate earnings and the World Economic Forum which is kicking off today in Davos. In Europe traders will have a close look at the UK employment figures this morning and the release of the BOE Monetary policy minutes.
While so far the BOE has signalled that an increase in interest rates isn't imminent a substantial acceleration in the decline of the unemployment rate might bring forward any such move.
Overall markets are like continue to be trapped in a trading range.
The basic picture is that the global economy with the exception of China is clearly on the way up and expected to accelerate as 2014 progresses while corporate earnings as can be seen in the US seem to struggle a bit which so far has kept markets from staging another break-out to the upside.
Until there is either more major good or bad news markets might just stay in the current trading range, while whenever a substantial intra-day move is taking place as soon as this one runs out of steam it is very like that traders a rather quick in taking profits which will reverse at least part of the move showing unwillingness to carry new open positions overnight.

Markus Huber | Senior Sales-Trader/Senior Analyst
Peregrine & Black
www.peregrineblack.com

ETX Capital Comment:

European equities march higher Wednesday morning after the IMF’s upgrade of global growth on Tuesday provided comfort to investors. Asian markets were trading mostly lower overnight, after the Bank of Japan lowered Japan’s median economic growth forecast. However, losses were subdued, as the Bank of Japan also pledged to maintain economic stimulus.

Emerging market nations remain a concern; Turkish lira remains pressured after the country’s central bank yesterday held steady on rates despite hopes of monetary tightening, triggering a free-fall for the currency. Over in Asia, Thailand’s central bank unexpectedly held onto policies too despite calls for 0.5% cut. Traders feel that inability by EM central banks to implement effective policy tools to safe-guard economies leave them vulnerable to capital outflows as the Federal Reserve remove stimulus this year and as asset allocators favour developed economies on their economic growth prospects over EM economies.

Here in Europe, earnings out of leading blue-chips are in the spotlight again this morning; BHP Billiton, in its half year operational performance review, reported that its iron ore output grew less than expected by 16.0% to 48.9 million metric tonnes in the second quarter. The numbers were strong in most areas however with the exception being petroleum. Encouragingly, the miner maintained its FY14 production estimate at 212.0 million metric tonnes. Elsewhere, ABB, the Swedish engineering giant warned on profits due to charges racked up from project delays following severe weather. That’s led to around $260million of charges; on top of that, the company said it will take a further $50million of restructuring charges – this has left investors feeling less than optimistic about ABB’s outlook this year.

Looking ahead, UK macro will once again steal the spotlight with jobs data and the Bank of England’s meeting minutes, a day after the IMF optimistically raised its forecast for UK growth this year. For the jobs data, expectations are for around a 30k drop in joblessness and the unemployment rate to tick lower to 7.3% from 7.4%. BOE minutes will be under scrutiny as the central bank again held steady on rates at the last meeting but so far has stayed tight lipped on re-adjusting forward guidance thresholds despite the improving jobs market and easing inflation to the Bank’s target. Over in the US, eBay and United Technologies are slated to report Q4 reports.

Ishaq Siddiqi
Market Strategist
www.etxcapital.com

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