Asian equity markets may have started the week in an upbeat mood but the fact Wall Street closed last night well off intraday highs appears to have set the pace for Tuesday’s session. The gains we have seen appear hard fought and the overriding sentiment does appear to be one of locking in the profits as opposed to pushing for more upside. The geopolitical backdrop may appear relatively calm right now, but the situation could easily deteriorate quickly.
Looking ahead, Wall Street is eyeing some modest gains at the open with that unwinding from mid-session highs yesterday looking a little overdone. However there’s limited fundamental data expected to be in play today, both in terms of economic and corporate news. Any respite is however likely to be short lived. Overnight we have the Chinese retail sales readings for July and many see this as the ‘canary in the coalmine’ when it comes to flagging deeper issues with the country’s economic growth. By all accounts the reading will come in as expected and traders will breathe a sigh of relief, but it could still produce some volatility before Wednesday’s session gets underway. For now however we’re calling the Dow up 27 at 16597 and the S&P up 4 at 1941.