It’s been a mixed start to the session for European indices – once again there’s little in the way of fresh fundamentals to be working on but the prospect of ECB bond buying has helped lift sentiment once again, at least in the core of the Eurozone. London may find some fresh direction off the back of the Bank of England meeting minutes, but overall the theme does appear to be that although equities are in the midst of a rebound, pressures appear likely to remain on the downside.
Gains have also been observed across much of Asia although the resounding theme is that volatility is back in play. The Nikkei soared as the Yen remained on the back foot, whilst the Shanghai Composite gave up earlier gains with investors continuing to express concern over the health of the Chinese economy in the wake of that lacklustre GDP growth we saw reported. Money market rates suggest the central bank is adding liquidity but this is failing to prop up equities - at least for now.
This is all pointing towards a negative start to the day on Wall Street. Once again we have a bunch of high profile earnings reports to account for before the bell including the likes of Boeing and Dow Chemicals, but it’s going to be the US CPI reading that holds the greatest potential in the short term. Anything that looks too sluggish could easily inject a degree of panic into already nervous traders and with oil prices continuing to slide, the impact this will have cannot eb ignored. Right now we’re calling the DOW down 22 at 16593 and the S&P down 1 at 1940.