It was a gloomy end to last week, but some hints of positivity are seen this morning as investors try to put the Fed’s statement behind them. The FTSE remains stuck in the trading range that has held throughout September, and with little fresh news over the weekend to drive trade what we are seeing this morning is a rebalancing of positions, as shorts take profits from Friday’s big downward move and brave buyers step in once again. The week will get busier, once PMIs from China, the eurozone and the US are out, and then the real test of bullish sentiment will be seen. Overall, Janet Yellen’s caution is still the thing that weighs most heavily on everyone’s minds.
Volkswagen shares have been hit hard by news that the company was using some nifty programming to toy with emission regulations. The news so far revolves around the US impact, but if European investigators become interested the potential penalties could multiply very quickly.
In London RSA Insurance tumbled as Zurich abandoned its takeover. With the shares now trading back to where they were pre-bid, investors are reassessing their view of the firm, and the current impression, stuck as it is in a long-term turnaround operation, does not lend itself to a cheery view.
US markets will be looking to see if they can claw their way higher this afternoon. We may see some read-across to US carmakers as a result of the VW news, which could see some big names come under pressure. With only existing home sales on the calendar for the afternoon, post-Fed sentiment will still be the key driver. Ahead of the open, we expect the Dow Jones to start at 16,452, almost 70 points higher.