Spreadex Market Update
European indices still in red, but US open could see Chinese clouds disperse
However, the indices are away from their session lows, partially helped by the news that the People’s Bank of China was preparing to inject another 140 billion yuan into the country’s financial sector, following the 120 billion yuan bundle last week. Whilst it may be a case of the central bank using a pack of plasters when surgery is needed, investors appeared to react more positively to the news than they have done to other interventions by the PBOC in the past fortnight. It means the FTSE has tentatively climbed past the 6000 mark, with the DAX sporadically re-crossing the 10000 level.
Things could look slightly healthier this afternoon, with the US open promising to bring with it a bit more positivity than has been seen this morning. The Dow futures are pointing to a near 300 point jump for the headline index, something that could help lift the European markets away from their current losses. The US also has some data-distractions on the cards, with durable and core durable goods orders expected to fall below the surprisingly strong figures seen last month.
A bit later then sees FOMC member, and New York Fed President, William Dudley speak at a press conference; whilst Dudley will ostensibly be speaking on the local and regional economy, it is not too far-fetched to expect at least a few comments on the likelihood of a 2015 rate hike, assuming a September lift-off is now out of the question. Last week (and crucially before ‘Black Monday’) Dudley stated that, whilst the China situation had ‘huge implications for the world economy’ the Federal Reserve was on track to implement a rate hike in the near future. It will be interesting to see how much his sentiment has changed following the chaos seen at the start of the week.
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