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After all the volatility of the May-June period, the bounce from around 6100 has caught many by surprise. The danger now is that many late-arriving bulls will be gored by some weakness, as investors become jittery ahead of the Federal Reserve’s minutes on Wednesday. This will be the decisive event of the week, as traders and analysts attempt to work out when the Fed will begin to ease back on QE3.
The US session has been more subdued, with the Dow Jones and S&P 500 gaining around 0.5% so far today. Earnings season begins with the usual first mover Alcoa taking its turn in the spotlight. Expectations are fairly cautious for the current season, which does give room for positive surprises for companies. With the US economy improving, it would not be surprising to see the better conditions reflected in the performance of American companies.
In terms of other markets to watch, the DAX is particularly interesting. It has failed once again to recover 8000, with this level being a strong barrier for the past three weeks. Greece and Portugal have dropped off the radar today, but I fear we might not escape without another eurozone crisis this summer.