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The week started off with some modest losses, with European markets influenced by yet another difficult session in Asia, where China stocks are still in retreat. However, investors then checked their calendar and realised that it is European Central Bank week, when Mario Draghi is set to unveil fresh measures to get the eurozone moving. This cheered everyone up no end, and we saw markets on the continent reverse initial losses.
In London however the FTSE stayed in the red, and as usual it was not hard to find the culprits – mining names are down across the board this morning, with particularly heavily losses for BHP Billiton as the Brazilian government announces fines for the recent disaster there. The sector continues to be an illustration of the idea that cheap stocks tend to get cheaper, with little sign that we are nearing a bottom in this beleaguered sector.
Aberdeen Asset Management, one of the few big UK companies reporting this week, fell over 4% in early trading, thanks to yet another quarterly outflow. The firm continues to seek ways to reduce its dependence on global equities and emerging markets, but for now its once-greatest strength remains its Achilles heel.
US markets return in earnest today after Thanksgiving. While they will be keeping one eye on the ECB, any fresh QE announcement in Frankfurt is likely to have less impact on Wall Street, where the focus will be on the Federal Reserve meeting later in the month.
The week culminates in non-farm payrolls, with today seeing just the Chicago PMI to act as a warm-up to bigger events later on. Ahead of the open, we expect the Dow Jones to start at 17,836, up nearly 40 points from Friday’s close.