Having seen US markets embark on a rollercoaster ride yesterday, the omens did not look good for European markets today. Indices across the continent started the day deep in the red, but have steadily clawed back losses.
China’s injection of fresh liquidity has been seen as a positive move, as the PBoC looks to build on yesterday’s rate cut. The picture still looks unclear, with bulls and bears finely balanced, but so long as markets can hold above the lows of the week then a recovery may still be in prospect. Even the ECB managed to boost sentiment, as one board member hinted that an expansion of QE in the eurozone was still a possibility.
US durable goods were much stronger than expected this afternoon, proving once again that the US economy remains a touchstone of reliability in these troubled times. Fed member William Dudley added further to the general atmosphere of optimism with suggestions that a September rate hike was now much less likely.
Equity bulls on Wall Street now need to maintain momentum and avoid another sharp drop towards the end of the session similar to the one seen last night, or risk handing the initiative back to the bears.