-- AM AnalysisEuropean equity benchmarks are set to open the week marginally lower
European equity benchmarks are set to open the week marginally lower from Friday’s closing prices, with risk appetite softer in sympathy of tapering momentum. Investors are balancing improving fundamentals with a potential shift to the supply of money, something the market has dealt with two times before in only the last four years.
The battle between the two is currently being won by improving macroeconomic conditions, as investors pick up much of any selling of risk with relative ease. And although sellers have pushed the market back from its highs, we haven’t seen the kind of volatility to warrant fears just yet. The Dow jones industrial Average sits at 15,720 this morning.
Overnight in Asia the MSCI declined 0.6 per cent as Chinese manufacturing slowed. Gold is largely unchanged, trading around the $1,233 level. The dollar has weakened against sterling and the euro.
By David White
-- PM Analysis
Euro Zone manufacturing PMI and Trade balance comes in relatively strongThe euro zone ended the year on a positive for business with manufacturing PMI and Trade balance coming in relatively strong. Germany saw mixed results for Flash PMI with better than forecast Manufacturing and slightly weaker than forecast services data, this coupled with improvements in the euro-zone data has led to a rally for the Dax up almost 140 points on the day.
Investors appear to be bullish again for UK markets after a boost in the euro zone and latching on to technical signals after the recent decline. With sentiment seeming to be that the markets can’t end the year on a decline, despite the hurdle of the FOMC meeting commencing tomorrow. The rise today led by Aggreko would indicate that speculators are convinced tapering won’t occur on Wednesday and are hoping to ride a rise to the years close.
With the FOMC two day meeting starting tomorrow, investors are stirring up a storm pilling money into equities in anticipation of no tapering, in what could be interpreted as overconfidence given the Fed’s recent decisions shocking speculators. The weakening of the dollar today would support the belief tapering won’t occur.
By Alex Conroy
Original Post
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