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Although US markets finished off the lows last night, European markets don’t appear to have the stomach for gains.
PMIs from across the eurozone were broadly weaker, but while this may have been the excuse for some tentative selling across the indices it actually reinforces the European Central Bank easing narrative.
Insofar as we can say that markets have been driven by anything, and they certainly haven’t been driven very far, it is uncertainty ahead of the ECB and what Mario Draghi might or might not do that is the key factor.
Supermarkets were in the spotlight for a second day after Tesco unveiled a third consecutive drop in quarterly like-for-like sales. Philip Clarke’s stewardship does not appear to be going according to plan, boosting calls for his departure, but the supertanker that is Tesco takes a long time to turn around, and patience may well be rewarded. However, the stock market is not known for this quality and the inevitable result could be another shakeup that simply leaves the titan directionless for even longer.
ADP numbers from the US herald the traditional start to the non-farms countdown, although the ECB meeting has rather stolen the limelight. A ten-point range has predominated on the S&P 500 all week, a clear sign if any were needed that most traders are merely pruning their existing positions rather than embarking on ambitious new bets. Ahead of the open, we expect the Dow Jones to start 20 points lower at 16,702.