In mid-morning trading the FTSE 100 is fractionally lower as the rally in Asia hasn’t been passed on to the West.
- China is back in business
- Still no stimulus from China
- Sterling steady before BoE meeting
Equities in Europe haven’t moved a whole lot since yesterday’s close. The Chinese stock market is back in business after being closed for one week, and the gains made in Asia overnight were not overly impressive. While China was on holiday, the West was buying stocks frantically as rumours of a stimulus scheme from Beijing were doing the rounds. Now China is back to work but there’s no sign of the stimulus package. Commodity stocks have cooled slightly this morning as traders are torn between booking their profits from the recent rally or else hanging in there in the hope this is just a pause before a move higher. In these circumstances, if there isn’t another reason to go long given to dealers, it quickly descends into a sell-off. Sterling is standing still ahead of the Bank of England interest rate decision, and the commentary plus the voting breakdown will be in focus. Sliding inflation will deter members from voting in favour of a rate hike, and this will be music to mortgage holder’s ears.
We are expecting the Dow Jones to open 100 points lower, at 16,810 as dealers are worried about the Fed minutes which are released later tonight. Traders are wondering how close a call it was to keep interest rates unchanged in September. The announcement will be an opportunity to find out what other members of the Fed are thinking, and it is feared they are more hawkish than the more vocal members of the US central bank.
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