Early gains have turned to ashes as the second day of September begins. The closure of Chinese markets for the WWII commemorations offers a glimmer of hope that indices in the developed world can stage some sort of recovery, but weak economic data from the US, Canada and Australia over the past 24 hours confirms that the world has bigger problems than just China.
Inevitably, Fed tightening concerns are still weighing, and today’s action after the open still suggests that rallies are there to be sold, rather than dips being bought.
ASOS shares have spent the first part of the session recovering from a hefty downward move on the open, as investors react to the departure of the founder from the CEO role. The shares have been steadily correcting along with the broader market in recent months, but have found a base around £28.50; the new boss now has a chance to take the firm forward in a different direction, and it appears investors are relatively upbeat about the new era.
US futures are off their overnight highs as we head towards the open this afternoon. The same bugbears of recent weeks remain with us, and if this afternoon’s private ADP payroll numbers are weaker than expected we could see further losses in equities as investors weigh up the chance of a September move by the Fed.
Ahead of the open, we expect the Dow Jones to start at 16,187, up 130 points from yesterday’s close.