Stock markets are more mixed as the week winds down, but overall dip buyers can be pleased with their work over the past 48 hours. 

  • Equity rally eases off after major gains
  • Stock markets look towards Q4 with more optimism
  • German elections keep European stocks in check

European markets have trimmed their recent gains this afternoon, while in the US the morning weakness in futures has been steadily reversed. The worries of the first half of the week have disappeared, and dip buyers find themselves firmly in charge as the last full week of September draws to a close. After the strong gains of Tuesday-Thursday European stocks have continued to take a breather, providing one note of caution for the week ahead but it seems like stock markets have successfully navigated the worries over Evergrande and jitters about the Fed’s policy outlook, leaving the overall move higher in stocks intact once more. 

Some of the hesitancy in European markets could also be put down to the German elections, which promise to be the most interesting in some time. Markets are facing a change of direction in Germany unlike anything seen in the past decade or more, and the end of Merkel’s tenure promises to be a watershed moment for the EU and global investors alike. It is not surprising therefore that the Dax is down for the day, but unlike the UK and the US the current German body politic is not given to sudden changes, and a ‘traffic light coalition’ will mean that change will not be too rapid or dramatic. 

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