Equity markets in Europe are in the red as yesterday’s buying spurt didn’t last.
If the stocks can’t swing back into positive territory, traders might start to suspect that we are at the beginning of a market correction. The sharp decline that started last week may gather momentum, and investors are already cautious, so it wouldn’t take much to test their nerves. The firmer euro is also playing a role in the decline of the Continental markets.
Shares in Carillion have collapsed yet again as the troubled construction company stated it will breach its banking covenants. The company also lowered its profit outlook again and stated that their asset sale programme isn’t going as fast as they had hoped. Things have gone from bad to worse at Carillion, and the business is in dire need of cash to keep the lights on. Even though the business has plenty of work in the pipeline, it must scramble for cash in order to keep its head above water.
GBP/USD pushed up to a level not seen for over two weeks. The broad decline in the US dollar has helped sterling, but signs the UK economy is firming up too has also played a role in pushing the pound higher. Sterling has been in an upward trend against the greenback since March, and if it clears $1.3335 it could target $1.3500.
EUR/USD is higher as the weakness in the US dollar has helped the single currency. Mario Draghi, the President of the European Central Bank (ECB) was speaking in Frankfurt today. Mr Draghi was upbeat about the eurozone economy, but stated that the monetary easing was still required to prop up inflation.
We are expecting the Dow Jones to open down 40 points at 23,418, and we are calling the S&P 500 down 4 points at 2581.
At 1.30pm (UK time) the US will announce the latest housing starts and building permits reports, and traders are expecting a reading of 1.18 million and 1.24 million respectively.
Foot Locker and Abercrombie & Fitch will announce their quarterly figures today.
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