Equities in London are a touch lower after US equities closed at a record high yesterday. Political tensions between Ukraine and Russia are far from over, but currently diplomacy is leading the charge rather than military force. Traders welcomed the political solution so much that the relief rally yesterday was bigger than Monday’s selloff. Banking stocks are extending yesterday’s gains but we are beginning to ask the question, how much higher can we go?
Beijing has reiterated its 7.5% growth forecast, however it is not the level of growth traders are concerned about but how the growth is attained. China’s credit-to-growth ratio is increasing, and it only matter of time before bad debts start to rack up. Mining stocks have slipped into the red after the HSBC Chinese composite PMI had its first contraction in seven months.
Shares in Bank of Ireland have recovered slightly after Fairfax Financial and Wilbur Ross disposed of a large stake in the Irish bank yesterday. The UK services sector expanded in February, which just goes to show that nearly five years of rock bottom interest rates pay off.
In the US we are expecting the Dow Jones to open five points lower at 16,390 as traders take their profits.