There’s a lot of uncertainty in play early in the European session with traders evidently struggling as to how to call this market. Economic data has been relatively thin on the ground this morning and although what we have seen has been in line with expectations, it can also fairly be categorized as ‘pretty dismal’ which is adding to the idea that it’s going to be difficult to break this downward trend we’re appearing to be locked into.
The situation couldn’t however have been much more different in Asia, where markets cheered the start of the new trading week and looked to take a lead from Friday’s rally on Wall Street. A weaker Yen sent the Nikkei soaring although the fact that the currency has since staged something of a retracement could well already be setting the tone for tomorrow’s open. Elsewhere gains were rather more measured and although the Hang Seng is the relative underperformer – now almost flat on the day – there’s little to suggest the resurgent protests are driving this.
Over to Wall Street and futures are suggesting we’ll see further gains at the open, although these look somewhat modest in comparison to the rally we saw ahead of the weekend. Again, fundamentals are incredibly thin on the ground in the hours ahead so it’s all going to boil down to whether traders feel the sell-off has run its course. With the S&P having staged such a comprehensive rebound from last week’s low of 1821, there’s certainly scope to think the worst might be over, but the geopolitical situation remains fraught and the Eurozone economy is still in a mess – we could easily see a return of the bears. Ahead of the open we’re calling the DOW up 45 at 16425 and the S&P up 5 at 1892.