Surprisingly, the mining sector – normally quite sensitive to upbeat data from China – continues to be out of favour despite signs of a pick-up in global growth. Fresnillo and Polymetal International are keeping each other company at the bottom of the index.
Investors have clearly taken a judicious approach to the positive US jobs data. While markets should extract confidence from decent fundamentals, the increased odds of a quantitative easing taper has taken the wind out of the bullish sails in European equity indices for the time being. The recent correction has been shallow at best and, while the overall uptrend remains intact, a more significant correction to the downside could actually be healthy and allow for new positioning.
The Sentix investor confidence indicator remains optimistic although the 8.0 level on the index is lower than the 10.5 expected. While progress within the eurozone has, for the most part, succeeded in silencing some eurosceptic naysayers, as long as there is any uncertainty or lack of decisiveness surrounding the European banking sector regarding a future banking union, specifically the single resolution mechanism, investor confidence may hit a plateau. The eurogroup meetings taking place in Brussels today should go some way to addressing these issues.
Governor of the Bank of England Mark Carney will speak at the Economic Club of New York today. Sterling has found the air a little thin above the $1.64 metric over the past week, so the usual attempts to decipher interest-rate tightening timelines from Mr Carney’s speech should add a little volatility to the foreign exchange market.