Markets shrug off early losses

In mid-morning trading the FTSE 100 is 30 points lower despite staging a recovery in early trading.

London
Source: Bloomberg
  • Stock reverse losses from Monday’s selloff
  • Indian interest rate cut works for now
  • Federal Reserve continues to send mixed messages

Stocks in Europe started off on a slippery slope but they have been making up for lost time ever since. Asian stock markets fell overnight as concerns over growth in the area persist. The central bank in India cut interest rates by a larger-than-expected amount, and that tells us everything we need to know about Asia right now.

Excessive monetary easing is a sign that the economy is in trouble and, while it might give a short-term boost to stocks, now could be the time to get out while the going is good.

Glencore shares are leading the way, as the stock claws back some of the server losses from yesterday. A 10% jump this morning may seem impressive but when stacked up against its 63% drop since China’s devaluation seven weeks ago it seems small.

China will publish manufacturing numbers on Thursday, and we may see today’s bounce undone if those economic figures fail to live up to expectations. Bouncebacks are a common occurrence in the wake of massive double-digit losses but it will take much longer to rebuild confidence in the firm. 

We are expecting the Dow Jones to open at 16,055. The US equity market is torn between Federal Reserve members’ comments, as the contradicting views of policymakers John Williams and Charles Evans has left traders conflicted.

The heavy losses sustained in Asia overnight are not to be ignored, but for now US investors are looking at events closer to home — namely the fear of a possible December interest rate hike. As long as Fed members remain at odds over when US interest rates should be increased, there will be division among dealers. 

IGA, may distribute information/research produced by its respective foreign marketing partners within the IG Group of companies pursuant to an arrangement under Regulation 32C of the Financial Advisers Regulations. Where the research is distributed in Singapore to a person who is not an Accredited Investor, Expert Investor or an Institutional Investor, IGA accepts legal responsibility for the contents of the report to such persons only to the extent required by law. Singapore recipients should contact IGA at 6390 5118 for matters arising from, or in connection with the information distributed.

This information/research prepared by IGA or IGA Group is intended for general circulation. It does not take into account the specific investment objectives, financial situation or particular needs of any particular person. You should take into account your specific investment objectives, financial situation or particular needs before making a commitment to trade, including seeking advice from an independent financial adviser regarding the suitability of the investment, under a separate engagement, as you deem fit. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. In addition to the disclaimer above, the information does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any views and opinions expressed may be changed without an update.

See important Research Disclaimer.