Slightly improving inflation figures in China have helped set an optimistic tone for European markets this morning as the DAX, FTSE and Euro Stoxx 50 all look poised to post higher highs. Now that we have seen the re-emergence of a buoyant M&A market adding to the comforting feel of the QE safety net below, European equities are confirming their status as the destination of choice for cash.
IG's general election binary has shifted dramatically in the last 24 hours. The binary on who will be the next Prime Minister, David Cameron or Ed Milliband, is now 50/50 having previously given David Cameron a healthy lead. It is also worth noting that the most likely outcome from this general election is now pointing towards a 32% chance of a Labour minority government.
Judging by the fact that GBP/USD is still rangebound and the FTSE 250, a less international index than the 100, is still strong, traders have not begun to fully factor in the looming uncertainty that this election will bring.
US traders will still be trying to get their heads around the fact that European equities are the most positive, and leading them higher rather than the other way round.
Market watchers will be monitoring how frequently the US corporate arena complains about the negative impact the strong dollar is having on them, especially as the general institutional opinion is that both GBP/USD and EUR/USD could well be set to continue falling.
Ahead of the open we expect the Dow Jones to start 11 points lower at 17,947.