Any hope that bargain hunters would
look to prop up European markets this morning appears to have been squarely
dashed in early trade with broad-based selling remaining the order of the day.
There’s some cheer being found in London but even the FTSE-100 has seen some
marked declines in the first hour and the big number that many are waiting for
now will be the Eurozone CPI print. With a forecast reading of just 0.8%, the
amount of wiggle room policymakers now have is rapidly diminishing, so even a
relatively small undershoot would raise some very real concerns that deflation
is on the cards. Disappointment here could easily see another protracted bout
of selling.
It’s been a case of red numbers
across all the major Asian indices today too, with the Nikkei leading the way
lower as fears of global demand being dented have once again been weighing.
Losses are somewhat more modest in China and Hong Kong – there are suggestions
that Beijing will need to intervene with broad based stimulus measures to
prevent the country falling into a deflationary spiral as property prices risk
collapse so this may be softening the blow, but it’s not enough to defeat the
bears.
Looking ahead to Wall Street,
despite that late session rally yesterday, futures are eyeing a lower start
once again. Arguably if the situation in Europe and Asia is looking so
depressed, even more suggestions that a Fed rate hike will be pushed back a
while seems unlikely to have a meaningful impact on sentiment, Ahead of the
open we’re calling the DOW down 39 at 16103 and the S&P down 6 at 1856.
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