European equity markets bounced back this morning after the major sell-off we witnessed yesterday.
Tensions surrounding North Korea are still running high, but as far as traders are concerned, no new negative news is good news.
In tense situations like this, traders are cautious about buying back into the market, and the positive move this morning feels more like short covering than renewed bullish sentiment. European equity markets have been losing ground since the start of the summer, and the downward trend is still in place. The bounce back today could well attract a fresh wave of selling and political uncertainty is looming over the equity markets.
There is little change in the GBP/USD today and the latest lending figures from the UK showed a decline in the amount of money borrowed in July. Consumer credit fell to £1.17 billion from £1.45 billion. Mortgage approvals increased 3371, but the amount of money lent declined by £530 million.
The pound lost ground versus the US dollar for most of the month, but we are seeing a bit of a recovery. The US jobs report on Friday will be closely watched by traders, and it will give us an indication of what the Federal Reserve’s next move will be.
We are anticipating the Dow Jones to open 35 points higher at 21,900, and we are calling the S&P 500 up 3 at 2449.
At 1.15pm the US will announce the ADP employment report, and traders are anticipating 185,000 jobs to have been added in August, and that would be an improvement on the 178,000 that were added in July. The US will reveal the second-quarter growth figures at 1.30pm, and the consensus is for a reading of 2.7%.
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