US futures are pointing to a stronger open on Thursday

Good morning,

US futures are pointing to a stronger open on Thursday as investors shrug off concerns over the Scottish referendum and instead turn their attention to the second dose of monetary stimulus this week from the People’s Bank of China.

As the day progresses and we near the referendum result, I’m sure we’ll see some profit taking creep into the markets, especially if we get reports suggest the voting is neck and neck as the polls suggest. The result itself isn’t due out until the early hours of tomorrow morning which should make the last hour of trading today very interesting.

As it stands, despite what the polls say, people seem very confident that the Scots will vote no when push comes to shove. The odds strongly favour a no vote and that probably says a lot more than any surveys would. While a lot of Scots may like the idea of independence, which is completely understandable, I think a lot won’t be able to get past the fact that Alex Salmond and the “yes” campaign were not able to give any guarantees on key issues such as currency, central bank and EU membership. The lack of a plan B has seriously damaged the chances of Scotland getting independence and the country may now have to wait a long time to get another chance.

The decision by the PBOC overnight to announce a cut to the short term borrowing rate has provided another boost to the markets this week. This week we’ve already had reports that the PBOC has injected large sums of cash into the country’s five largest banks, which in itself gave the markets a big boost. Today’s announcement is a massive statement of intent from the PBOC. Despite its desire to tighten credit conditions and reign in some of the reckless lending that has happened in recent years, it will not do so at the expense of the country’s growth.

Investors have been concerned about China again recently, with some of the numbers being far from great. But stimulus has worked in the past so there’s no reason to doubt that it will again. Well, that’s what the markets are betting on anyway.

We have plenty of US data being released today, although it may be somewhat overshadowed by the referendum. The housing data is likely to show a small decline in both building permits and housing starts which is a little concerning given that rates will rise in the next 12 months which could weigh further on the numbers. We’ll also get jobless claims figures for the last week as well as another speech from Fed Chair Janet Yellen so there’s plenty to focus on from a US perspective as well.

The S&P is currently seen opening 7 point higher, the Dow 54 points higher and the Nasdaq 15 points higher.