Chinese bounce eases European fears

An absence of outwardly negative macro news has enabled equity markets to replace pessimism with a touch of optimism.

Fears over the Chinese equity markets have for the time being eased, as the Shenzhen once again staged a minor recovery in overnight trading. Although a quick glance at the history books proves that stories involving central banks trying to bend the will of the free markets to their own don’t end well. European equity markets appear to have collectively decided enough is enough, and yesterday’s resilience is being added to after a re-emergence of the buy-on-dip brigade.

Traders don’t know where to look as they are being flooded with both quarterly releases and trading updates from numerous big name corporates. Fears that an absence of a CEO would leave Barclays rudderless have quickly been quashed, as chairman and now acting CEO John McFarlane has overseen expectation-beating pre-tax profits regardless of the fresh tranche of £850 million that the firm has had to set aside due to historical PPI misdemeanours. Another firm embarking on cost-cutting measures or ‘significant’ staff reductions is Tullow Oil. The African-based oil producer, which has been crippled by the low spot prices, has seen the last five years’ worth of share price increases wiped out.
Regardless of the comments that interest rate rises could materialise at the turn of the year, Taylor Wimpey has once again been able to post impressive first-half profits, up by a whopping 33.4%. This highlights that even the end of the six-year run of historically low interest rates isn’t denting the UK housebuilder’s momentum.

Today’s FOMC statement might not be out until 7pm (London time), well after the European markets close, but it will not be too long before the markets freeze up in anticipation of Janet Yellen’s latest thinking surrounding interest rate rises.
After last night’s disastrous figures, Twitter would be well advised to sit back and take notes on how you monetise a sizeable social media user base, as Facebook posts its second-quarter figures after the bell tonight.

Share: Analysis feed

This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients.