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Stock markets were given a boost yesterday by the comments from Mr Dudley of the Federal Reserve, who stated that quantitative easing (QE) is unlikely to be tapered until US unemployment falls further. The policy of the Fed is one of the most important factors in equity markets, and investors are wary that the Fed may reduce their stimulus package. However, if there is no change to policy for the foreseeable future, traders could remain bullish in the short term.
Overnight, China announced its latest business sentiment indicator, which came in at 53.7 for June. When compared with 56.7 in May, this fuels the fear that the second-largest economy in the world is slowing down.
In terms of economic announcements, the US will release the latest Chicago PMI and the University of Michigan consumer sentiment figure at 2.45pm and 2.55pm respectively. These reports will give us an indication of the strength of the US economy. If the figures come in below expectations, we could see equities rise in the expectation that QE will remain unchanged.