Dip buyers back in action
|The FTSE 100 is 26 points lower in mid-morning trading, hurry by a drop in mining stocks, but equities are a little brighter despite yesterday’s losses in the US.
Tentative signs of a recovery are in evidence across equities in Europe, while US futures have begun to look more encouraging after yet another heavy day of losses. The only question is whether a rebound will begin ahead of the Fed decision tomorrow, or whether another quick flush is due before tomorrow’s widely-expected rate hike. Looking back at the history of equities in the wake of each hike since the end of 2015, the near-term picture is not pretty, with most increases followed by either sideways trading or a swift drop. Although last December’s rate hike was followed by the usual Santa rally, the cheery feeling was followed by January’s stomach-churning sell-off. Dip buyers might have a last hurrah in 2018, but beyond that the outlook is not encouraging.
Concerns about Chinese growth continue to hit FTSE-listed miners, with sentiment hit hard after President Xi failed to unveil any new initiatives to get growth moving again. Mercifully, he did not mention trade wars either, which is at least better than a tub-thumping exercise in rhetoric. Those hoping to leave trade wars behind in 2018, however, are likely to be disappointed.
Ahead of the open, we expect the Dow to start at 23,744, up 152 points on last night’s close.
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