European equity markets have opened much higher given the positive move in Asia overnight, but traders are already wondering how much longer this euphoria will last, and the longer we hang around these levels the more likely it will pull back.
The phrase ‘dead-cat-bounce’ has been bandied about this morning, and unless we have a fresh round of buying then the rally will unravel. This week traders have been tricked into buying up cheap stocks thinking the correction is here to stay, only to have their fingers burnt. The markets are very sheepish at the moment and everyone is waiting for someone else to make the first move. The sense is that dealers are anticipating a big move in either direction, but for now the fear factor is too great. It will take a lot more than one good trading session in Asia to convince dealers that everything is back to normal.
AMEC Foster Wheeler shares are higher today even though the company had a challenging first-half. The overall positive sentiment in the market has pushed the stock higher, but the outlook is still poor as the depressed oil market will translate into weak earnings for the firm.
We are expecting the Dow Jones to open 165 points higher at, 16,450, as the comments from Mr Dudley are still echoing around Wall Street. The events of the past week have led traders to believe that interest rates will not rise in the US next month, and after Mr Dudley’s remarks yesterday dealers are now not so sure if there will even be a rate rise this year.