Equity markets have opened higher this morning and the continuation of yesterday’s rally is underway; however, despite traders’ optimism there appears to be only so far they are willing to buy into the market. The initial jolt higher after the open isn’t making additional ground, and traders have been left in limbo over Greece.
The feeling of not knowing is the worst, and dealers don’t know whether to bank their profits or to keep going long in the hope that a deal will be hammered out towards the end of the week. In scenarios like this traders can be fickle, and if they are not fed positive news in quick succession they can lose interest very quickly.
Mining companies had a muted reaction to the HSBC survey of Chinese manufacturing, and the slightly improved reading that exceeded estimates was shadowed by the fact that the reading is still in negative territory.
Petrofac shares are up 8% today after the oil services firm revealed its profits will be heavily weighted to the back end of the year. The share price of the company rebounded this year in line with the jump in the price of oil, and the company is banking on a sharp upturn in capital expenditure from big oil companies at the back end of the year. We have witnessed a large correction in the price of oil since January, but we haven’t seen any increases to expenditure plans, and without it Petrofac’s rally will not be sustained.
We are expecting the Dow Jones to open ten points higher, at 18,129, and this is down to the positive sentiment surrounding the Greek situation, for now. The US index futures are catching the tail end of the European rally, and there is little else to go on. The move in the US market is a fraction of that experienced in continental Europe, and it seems that 18,200 is out of reach for now.