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The contraction of last night's US ISM manufacturing data went some way to convincing the markets that the end of the US quantitative easing policy is some way off. Ironically, this bad news has been perceived positively by equity markets that are desperate for the US to continue with its stimulus policy.
Spain added to the bullish mood in early trading by stating that unemployment levels have fallen at a faster rate than anticipated, dampening the likelihood of EU unemployment levels rising past historical highs.
There has been little company news-flow today, and the afternoon session feels very much like it is waiting for tomorrow’s economic data releases. In the morning we will see EU and UK service PMI figures, monthly EU retail sales figures and the revised quarterly EU GDP. This will be followed up in the afternoon by non-farm payroll figures and the Federal Reserve Beige Book announcements. This full day of economic data will be more than enough to move the markets.
Our clients appear to still be questioning whether this latest movement is a correction or a change in trend, as 51% are currently long of the FTSE, showing that opinion is very much divided.