Stock markets in Europe are higher today as the tensions surrounding North Korea subside. 

We have seen this scenario before where tensions rise and stocks fall, followed by no new developments, and then equities bounce back. The situation is still ongoing, so today’s positive move could be down to short covering and a bit of bargain hunting. In tense times like these, not many investors would buy into the market for the long haul.

The positive mood in equities was helped by the Caixin survey of China’s service sector. The report came in at 52.7 for August, and traders were expecting 51.8 – the July report 51.5. The second largest economy in the world is making an effort to focus more on the service sector, and it is encouraging to see the move is going well.

Shares in Redrow gapped higher and hit an all-time high this morning after the company posted a 26% jump in full-year profit. The firm also increased its dividend by 70%, which is not only generous, but also tells us how confident they are of future cash generation.  

The EUR/USD and GBP/USD are lower on the day as the latest services data from the eurozone and the UK both showed a slowdown in the growth rate. The service sectors are by far the biggest industry in their respective economies, and a cooling in the growth rate could lead to lower overall economic growth.

Compared with Friday’s close, we are expecting the Dow Jones to open 43 points lower at 21,944, and we are calling the S&P 500 down 6 points at 2470.

At 1pm (UK time), Lael Brainard of the US Federal Reserve is due to speak, and the central banker has called for the winding down of the Fed’s balance sheet ‘soon’. In recent months, Ms Brainard hasn’t been pushing for interest-rate hikes.  

Hewlett Packard Enterprise announce their third-quarter figures today.


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