More of the same

It is several weeks since last I shared with you my views on markets. Has much changed over this time? Not really.

The FTSE 100 Share Index is little changed overall, despite there being more than a few significant happenings taking place in the interim. More recently shares succeeded in recording a modest rise last week, despite falling 0.5% on Friday. But it is still speculation on the outcome of June’s referendum on our membership of the European Union that continues to drive sentiment.

Not that central banks are to be left out of the equation. Both the Federal Reserve Bank and the European Central Bank will be publishing minutes of their rate setting meetings soon, which should give a clue to the future path of interest rates. While Fed Governor, Janet Yellen, made some dovish remarks last week, recent robust US jobs data has strengthened the case for a tougher stance. The last thing the Governor needs is an overheating economy.

Europe, of course, is in a different situation altogether. The issue that grabs most attention continues to be the immigration crisis, though our referendum – the results of which could well be influenced by the failure to grasp properly the problems caused by the flood of refugees – is also causing concern. Growth is still stuttering, while deflation remains a threat. Yet still the euro makes ground over sterling.

China, where markets were closed at the beginning of the week, has drifted out of the headlines, other than in the part they have played in our embattled steel industry. The bu siness headlines may have been full of Tata’s troubles, but there is little of significance for equity markets in this saga. Of more importance is a further fall in the price of oil, fuelled by fears that producers may fail to agree the needed production cuts to head off a rising surplus on world markets.

On the economic front, trade and manufacturing data will demonstrate how Britain’s exporters are faring. Given the slide in sterling against the euro as a consequence of fears of a possible Brexit, the outlook there might be improving, though there is evidence that business is deferring investment decisions until after the vote takes place. A lot of things will remain on hold until after June.

Otherwise, while company news is plentiful, there are few household names pronouncing imminently, the possible exception being Marks & Spencer, which is posting a fourth quarter trading update. Given that Next recently warned on its profits, analysts will doubtless pay significant attention to this statement. All in all, nothing much seems to have changed in recent weeks, so far as markets are concerned.

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