The Day So Far
Equities beginning the week on the back foot as Friday’s rally has failed to kick on; indeed US equities struggled into last week’s close. S&P futures are trading just 5 points from the 1900 handle having traded as high as 1950 on Friday morning. Global growth concerns are driving this risk-off renewal as industrial profits in China fell at their fastest pace in 47 months. As a result, mining stocks have taken a beating, with the much-maligned Glencore down 17% this morning and the FTSE Mining index reaching its lowest level since 2008.
Japanese equities underperformed during the Asian session after Bank of Japan Governor Kuroda refused to divulged whether the central bank will add to its substantial QE programme following last week’s negative inflation print, the first time Japan has experience a fall in prices since 2013 and the start of Kuroda’s QE programme.
The Afternoon View
This is a busy week for data culminating with Friday’s Non-Farms release. However, today is the quietest of the lot, with just Personal Income and PCE Deflator at 13:30 BST followed by Pending Home Sales after the cash open. The most revealing items on the calendar could come after the European close, with Fed’s Evans and Williams both due to speak at 18:30 BST and 22:00 BST respectively. We are sticking with our bearish bias for equities, the failure of the bulls to push on on Friday has been noted and we are likely to see cautious, range bound markets through to Friday’s NFP. I would not expect a significant break of the 1900 handle, also day’s S1 and the 2 our strategy. Long T notes and short crude and the euro complete our bias, one that has worked well recently.
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