Stock market bounce still absent

Equities continue to tumble as bulls make themselves scarce.

London Stock Exchange
Source: Bloomberg

Yesterday saw a myriad of central bankers giving their assessment of market conditions and timelines for rate rises. Regardless of the opportunity to confuse, the markets still appear convinced December is the date when the Fed will fire the starting gun.

Mario Draghi’s confirmation that appropriate action to top up the current ECB QE scheme would be taken as and when required has failed to act as a catalyst for European equities. So far today there has been precious little sign of buyers being tempted back into action and it is another day where the bulls look like they will remain in hibernation. A combination of dollar strength and struggling Asian demand has been enough to force the  mining sector onto the back foot for most of the week.

One of the few bright spots in the early trading session has been the bounce in the mining sector as the recent sell off looks to have run out of impetus. The overnight announcement that the initial Brazilian fine for BHP Billiton’s dam disaster will only be $66 million has come as a welcome relief – but speculation that Brazilian government lawyers are looking to sue the mining giant for $1 billion could just be the start. Since its IPO in March,

Auto Trader’s share price behaviour has been exemplary and today’s jump in profits by 18% goes a long way to explaining why the company has been held in such high regard by investors. Much like rightmove.com, it has been the firm’s ability to  encourage market participants to utilise its platform as their primary sales point that has seen the company go from strength to strength.

Considering the depth and volume of Thursday’s comments the markets have had to absorb, it will take longer than a day for that sentiment to dissipate. Until the next FOMC meeting the likes of today’s US retail sales figures and PPI data now look like hurdles that need to be cleared rather than potential reasons for change. Ahead of the open we expect the Dow Jones to start broadly flat, at 17,448.

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