It seems that the rush for the exits has come to a halt for now, but, like the proverbial parrot, this bout of risk aversion may not be dead, but just resting. It is still a struggle to work out the real outlook for markets, since the dust kicked up by last week’s Fed meeting will take weeks to settle. The Fed might be supposed to remain aloof from market panic, but it cannot have escaped them that the reaction to their upcoming policy changes has been less than positive.
The FTSE 100’s 6000 level has held for now, which will come as relief to many who had watched the markets press relentlessly lower over the past month. Both banks and miners are in better form so far this morning, looking to take back some of their China-inspired losses. A rally of a thousand points begins with a single step, but it would take a brave person to suggest that the bottom is now in and that the only way is up once again. Oil firm Petrofac has reported that it is expecting an upturn in the second half of the year, a case of ‘jam tomorrow’, rather than ‘jam today’ but the strong pipeline of deals does suggest that the company will continue to deliver the goods.
With lots of economic data on the calendar today investors will have plenty to think about, which at least gives hope that we can try to put all the excitement of last week behind it. Durable goods, new home sales and consumer confidence will dominate, but the question will be whether US markets can continue their bounce from late last night and follow their European counterparts higher from here. Ahead of the open, we expect the Dow to open 80 points higher, around 14,740.