Yesterday’s move higher and strong finish in the US will have caught out a few overeager bears, but it will take time to recover risk appetite and we are still lacking any major catalysts to encourage investors back into the market.
A weak reading on UK retail sales has taken some of the shine off sterling this morning, but the currency was lifted by an in line reading on the consumer price index (CPI) for March, taking it back above $1.67.
Meanwhile, geopolitical risk remains on the agenda after a ‘frank’ chat between Barack Obama and Vladimir Putin during which both leaders probably took the chance to air their grievances. So long as there is even the faintest prospect of a Crimea rerun in eastern Ukraine, markets will find themselves hobbled.
After an initial spike this morning, power group Aggreko has settled for the time being, up 2% on the day. The update didn’t exactly sparkle, but the broadly encouraging outlook and the progress on paying down debt, along with a proposed capital return for shareholders, will go some way to restoring investor faith in this solid business.
It’s a busy day for US data today, with the CPI for March and speeches by three Federal Reserve members including Janet Yellen, as well as Intel and Yahoo among the list of companies reporting. US futures have edged lower this morning but while yesterday’s bounce aided by Citigroup’s encouraging results was welcome news for some, the main focus of the week is on Chinese data, including GDP, tomorrow morning; this could keep many investors on the sidelines for now.
Ahead of the open, we expect the Dow Jones to start 15 points lower at 16,158.