European equities are set to start flat this morning as traders struggle for direction. Yesterday was a mixed day for Europe, what with the DAX higher, the CAC flat and the FTSE lower. Overnight hasn’t provided any clarity both though as the US had a strong session with respectable gains whilst Asian markets have erased early gains and are now heading south. With the recent rally built on the assumption that the world’s central banks will help out with some more loose monetary policy, with the BoE and Fed releasing the minutes from their last meeting and an ECB meeting today, we could be about to find out that the bulls rally has been built on sand.
US markets have headed south overnight, giving back a portion of gains they accumulated this week. After China returned from a 3 day holiday, Asian markets were also on a bearish trend with investors struggling to find a true direction. The Fed will release their minutes today which will hopefully give traders a chance to gauge the thinking of the U.S central bank.
US and Brent crude have struggled to maintain their bull run overnight and have since come off given that U.S crude stocks rose by 3.1 million barrels rather than the expected increase of 2.2 million barrels. With little data to come out this week, the markets have focused on longer-term demand trends that have supported prices.
The British pound has performed well in relation to the US dollar and hit a 2-week high of 1.5338 on Wednesday. These fresh highs were boosted from UK production data that rose 1.9% in August compared to the same month in 2014.
Contributed by Capital Spreads