Softer start in Europe as pull-back continues
Stocks continue to retreat from the highs of last week as uncertainty over the Fed’s plans and mixed macro data place hurdles in the path of equity market bulls. The orderly nature of the pull-back suggests a sensible breather after what has been another phenomenal run up in the major indices, but the longer it goes on the greater the potential for the correction to gather pace…
Amongst the stocks suffering the worst of this morning’s falls are cruise ship operator Carnival, who sit at the foot of the index after forecasting a potential quarterly loss on lower than expected bookings. The move has been exaggerated by news of a downgrade from Morgan Stanley, who cut the stock to underweight in response to the statement.
Centrica are also struggling, down almost 4% as the sector comes under fire from Labour leader Ed Miliband who plans to freeze energy tariffs if elected to office in 2015. Whilst there would be little argument from the majority of voters that the energy companies have had it too good for too long, the Labour party and Ed Balls’ failure to detail a wider, viable alternative economic plan means their election remains unlikely, and in that light the move in Centrica shares looks potentially overdone…Durable Goods and Home Sales data due from the US this afternoon at 13:30 and 15:00 respectively will add further colour to the US recovery picture and will likely inform further debate over the prospect of Fed tapering in October. Unfortunately any interpretation of the data will be secondary to the ongoing game of ‘guess what the random Fed member is thinking’ that we seem set to play for the rest of time…CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.