European markets continue to bounce heading into the weekend

European markets continue to bounce heading into the weekend.

- Asian worries trigger fresh IMF global growth downgrade

- Fed minutes suggest 2015 is too early for rate rises

- Alcoa set an ugly precedent for the US reporting season

Christine Lagarde and the IMF committee who are currently in Lima for their annual meeting have downgraded global growth from 3.3% to 3.1%. This is just the latest in a long line of major financial think tanks that have increased the negative weighting they are giving the cooling Chinese economy. The Fed’s recently published minutes stated the situation in Asia had not ‘materially altered’ the economic prospects in the US. The minutes then proceeded to extensively discuss the situation in Asia, calling into question the validity of the initial statement. If last night’s Alcoa figures are setting a template for this latest US reporting season then markets could see last quarter’s $11 trillion equity valuation collapse being added to. Once again the institutional analysts had set a relatively low bar and yet Alcoa still tripped. The US aluminium company has seen the metal’s selling price crumble by 25% over the last year, resulting in a quarterly loss of $59 million compared to last year’s $245 million profit.

The bounce that we have seen in commodity prices over the week has continued to hold, and in the case of oil has even been added to. These more encouraging levels have seen the energy and mining-heavy FTSE show the sort of resilience required to ensure the normally investor-friendly fourth quarter of the year holds true to form. The conundrum that is Glencore continues to baffle traders. Although it enjoys a market capitalisation of a major global corporation its shares are now back to last month’s placing level and are showing the sort of volatility normally associated with penny shares. We are expecting the Dow Jones to open 22 points lower from Thursday’s close at 17,028.