Spreadex Market Update
US open impresses, but analysts fearful that Dow Jones et al. will run out of steam by close
The Dow Jones initially jumped over 400 points as trading got underway, with the added bonus of better than expected durable goods orders adding to the positive atmosphere. However, those kinds of gains were a bit too enthusiastic for investors, with the index dropping back to a more reasonable 200 to 300 point increase as the open receded into the distance.
And this points to the key question of Wednesday’s US session; will these early gains be sustainable until the close? Yesterday saw similar scenes at the open only for the US markets to fall at the final hurdle, leading to the muted trading that has defined this Wednesday. And with today’s growth less explosive than what was seen on Tuesday, there are already fears that the US markets might run out of steam as the session continues.
Things will then become even more complicated tomorrow, with the latest second quarter US GDP estimate set to arrive in the afternoon. Analysts are predicting annualised growth of 3.2%, a big improvement on the 2.3% reading at the end of July but something that might struggle to make itself heard if the markets have to endure another choppy Asian session.
The FTSE, DAX and CAC received a helping hand out of the blue around lunchtime, after the ECB’s Peter Praet stated that ‘there should be no ambiguity on the willingness and ability of the governing council to act if needed’ when questioned about the likelihood of the Eurozone reaching its 2% inflation target. Even this tiny sniff of further ECB QE was enough to lift the European indices, taking them well away from the session lows, with the FTSE and the CAC at points poking their heads above the positive territory parapet. Yet like the Dow Jones, such robust trading couldn’t last long, with losses beginning to widen once again after the post-US open dust settled.
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