It was a shaky start in London this morning, but as the session moves into full swing the buyers have managed to gain the upper hand. A strong performance from China and Japan overnight helped to support sentiment, as investors try to work out whether Friday’s stellar US employment report really does mean that a rate hike is on its way in December.
InterContinental Hotels sits at the bottom of the FTSE this morning, having touched a five-month high on Friday, as the firm denies it is considering any sale or merger. It is not the first time that such speculation has arisen and then been denied, but with the firm trading around nineteen times earnings and possessing activist shareholders on its board, the story is likely to return in due course, providing further incentive for investors to book themselves in.
Miners are holding up well in London despite China data that pointed to a further slowdown, but with the full effect of rate cuts yet to be felt there is some reason to hope that this performance may be reversed in the coming months.
With a light macro calendar today investors will have plenty of time to mull over whether Friday’s job numbers mean that Janet Yellen will succeed in squeezing in a rate hike in 2015. Market expectations and a steadily-rising US dollar certainly points to an increased chance, but with US firms still complaining about the impact of a stronger greenback and a still-shaky situation in emerging markets, the picture is not as clear-cut as last week’s figures might suggest.
Ahead of the open, we expect the Dow Jones to start around 40 points lower, at 17,867.