FTSE strong ahead of ECB meeting

<p>The FTSE 100 has seen a strong start to the day, rebounding 0.5% in early trading after suffering falls in the previous session as a […]</p>

The FTSE 100 has seen a strong start to the day, rebounding 0.5% in early trading after suffering falls in the previous session as a report showed that US private employers added a less than expected 119,000 jobs last month. With the markets particularly sensitive to economic data and US non-farm payroll figures due on Friday, investors reined in their risk appetite with banks and energy stocks experiencing the sharpest sell off.

This morning investors are digesting a stream of corporate updates in addition to the prospect of European inflation figures and perhaps more importantly the European Central Bank Rate Decision. The ECB is widely expected to leave rates unchanged today as it assesses the impact of its recent long term refinancing operations (LTROs), however there could be some indication as to whether any further easing is planned. Investors will be watching closely for any signs of further easing as around half of the European Union is now in recession and unemployment is the highest it has been in the eurozone since reporting began in 1999, a level of over 10%.

Turning our attention to UK equities, Smith and Nephew beat both analyst and management expectations for the first quarter of 2012, reporting trading profits of $252 million and EPS of 19.5 cents versus consensus of 18.5 cents. The strong results have seen the medical technology group gain over 3.8% and take top position on the FTSE 100 leader board.

Disappointing the market were the results from Antofagasta, which saw first quarter copper production dip almost 13% in the last three months of 2011, hit by maintenance and damaged equipment costs. Antofagasta lost over 4.75% in early trading and the negative sentiment spread throughout the sector, with Kazakhmys and Rio Tinto also shedding over 1.5%.

Another notable drop came from BG Group, which lost 3.7% despite its first quarter net earnings coming in sharply up from last year. A statement to say that despite cost pressures they were on track to deliver 6% to 8% average annual growth rate through to 2020 did little to inspire buyers.

As the week progresses, with French elections looming this weekend and non-farm payrolls out tomorrow, we can expect a turbulent end to this week. Any slowdown in US growth is bad news, but coupled with the uncertainty of how the eurozone crisis will cope under a possible new direction from a new French President may prove too much for the markets to swallow.

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