Annual results season may have just ended here but US companies are already getting out their numbers for the first three months of this year. The first quarter in the US is typically poor, mainly because of the weather, but this year there is also a host of other problems to contend with.

Paul Sommerville, of Sommerville Advisory Markets, said results were expected to be on the poor side, mainly because of the strong dollar and the oil price, but there are other issues. "Overall data from the US economy is weak. We saw the non-farm payrolls last Friday which were fairly dismal. Companies are struggling a bit. They have been cost cutting for the past few years and keeping results trim, but at the moment we expect these results to be on the poor side."

Nonetheless, stock markets, both in the US and Europe, have been trending near all time highs and the Federal Reserve is one of the drivers of that growth. It published its latest minutes last night. "The Fed is talking about keeping rates at all time lows for a while longer. If we look at their statements this time last year, they were looking at increasing rates around now. But last night, they said they'd keep them lower for longer. It might be the end of the year before they move and even then it will be gradual," Mr Sommerville explained.

One of the factors that will be to the forefront in Fed decision making will be the price of oil, which has been increasingly volatile of late. "In the early part of this week, we had the biggest increase in oil prices in 2015. That was followed by a 5-6% fall last night. The price is under pressure because supply is coming on thick and fast. The Saudis suggest they're going to continue pumping and that will drive the price down further. That will be a big problem for the energy sector, especially in the US, because energy stocks pay huge dividends. They'll have problems continuing to pay those and that will cause issues going forward," the analyst said. 

Mr Somerville also said he did not believe that Shell's proposed $70 billion bid for BG would go ahead. "BG traded up about 40% yesterday on the news of the merger but closed only 25% higher. That suggests that BG shareholders are dumping the stock because they don't believe it will go through. And Shell's share price fell 8%. Shareholders are not liking the deal. I would not be surprised to see this deal fall through," he concluded.

***
MORNING BRIEFS - Another big merger is on the cards in the pharmaceutical sector. Netherlands based Mylan is offering to acquire Dublin based Perrigo for just under $30 billion to create a huge generic medicines firm. Mylan offered $205 per share in a non-binding proposal - the offer represents a near 25% premium to Perrigo's closing price on Friday last. Perrigo and Mylan shares both surged on the news last night. The offer comes just six weeks after Mylan completed a $5 billion acquisition of Abbot Laboratories that saw it move its tax headquarters to the Netherlands. Perrigo has been domiciled here since 2013 when it acquired drugmaker Elan.

*** The dollar got a bit of a reprieve in recent days coming back from near parity with the euro, but it gained in strength again overnight after the US Federal Reserve issued minutes from its March meeting. They showed that members were split on whether the Fed should increase interest rates in June or wait a bit longer. With low inflation - or deflation - a feature of global economics right now, the Fed is the only central bank talking about increasing rates. Even the Bank of England appears to have given up on the idea for now but we will be hearing more from Mark Carney and his team later today.