Stocks In Europe Flat As Traders Await US Open

Stocks markets finally showed some signs of life on Wall Street by the close on Friday after a turbulent week. The Dow ended higher by 1.1% with the S&P up 1.4%, but the former still managed to post a loss of 1060 points for the week. Of course the White House weighed in on the stock market turmoil with former CNBC anchor, turned White House advisor Larry Kudlow stating that this was only a moderate fall and that it was “absolutely normal” considering the Fed’s rate path.

It will be the US that takes the focus again for markets today, as the biggest data of the day comes at 13:30 in the form of the retail sales. There will be a degree of nervousness around the US market open with futures already pointing to a loss of a 130 points. A disappointing reading from the US here will further add to the negativity. There is also a side story around rates here. There is a clear pressure from the White House to prop up the stock market by holding off on its current rate path, a path that is expected to lead to another hike in December (current probability 77.2%). The likelihood of Jay Powell doing that however are very slim. Market stability was always a key decision point for Janet Yellen, but after a Trump esq speech on the strength of the economy and that Fed policy it seems unlikely a week of downside would affect the Fed’s overall position.

Brexit will be the other headline to keep an eye on today after the DUP’s Foster claimed that a no Brexit was the likeliest outcome. This continues the rhetoric of “no deal is better that bad deal” as the fears hear remain that Northern Ireland could end up annexed from the UK. The Irish border issue has been the biggest issue during the whole negotiation, but has been the only issue with little to no progress made. For me the Irish border still has the ability to derail Brexit altogether.