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For once, Chinese markets took their lead from the Western world, with yesterday’s crash in US markets dragging both European and Asian markets with it. The issue here is that before long people will forget why they are selling, but continue to sell simply due to the fear factor.
Yesterday felt like the beginning of that. US crude inventories actually rose less than expected yesterday, which ordinarily would have been bullish for oil prices, yet once more the trend was the most important thing and everyone is looking for another reason to sell crude, which of course means the FTSE 100 in particular is dragged lower once more.
Today will see traders focus upon the Bank of England provide its votes, statement and minutes as it will once more opt to keep rates on hold. In the current climate of tumbling oil prices, crashing stock markets and a likely next leg lower for inflation expectations, it is clear the UK rate hike forecasts continue to push further back day by day.
The relative resurgence in the top four supermarkets appears to be the story of the UK earnings season to date, with today seeing Tesco report better-than-expected like-for-like sales, up 2.1% overall and 1.3% higher in the UK division. While threats of further expansion for the German discount duo (Aldi and Lidl) cannot be ruled out, this at least provides some hope for long-term investors that the fightback has begun.
Ahead of the open we expect the Dow Jones to start 69 points higher, at 16,220.