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European equities are set to fall on the open following overnight news that ebola has hit New York. Although the regular cash session in the US saw some impressive gains, when the story broke that a doctor in New York was confirmed to have ebola the Dow futures shed over 100 points. Interestingly, although the European markets are taking their cue from the US overnight futures session, Asian markets seemed to have shrugged it off and are instead taking their cue from the positive cash session.
Markets have staged an impressive comeback following the recent sell off but its foundations look shaky. All the sources of uncertainty surrounding the global economy are still hanging over markets, prospects for global growth continue to be revised lower and central banks are still having to sing their dovish song to keep everyone happy. It feels as though it would only take a few traders to get skittish and then tip the markets back in favour of the bears.
Another bout of better than estimated corporate earnings in the US led by Caterpillar (up 5%) drove the Dow Jones higher yesterday to 16,702 a gain of over 200 points for the session. However, overnight we saw a sharp selloff in the equities on reports that a doctor in New York tested positive for Ebola after returning from West Africa. It rebounded slightly at the time of writing but is still in the red.
Manufacturing data in the euro area showed a surprise growth this month, easing recession fears with Spanish unemployment also receding to the lowest level since 2011. Nonetheless, the progress is too timid to offer any comfort. As a result the shared currency barely moved against the greenback ending near flat at 1.2646.
There were reports in the crude market yesterday that a Saudi Arabia official said the amount of oil supplied this month actually fell. Crude prices were already on the move following encouraging economic data coming out of Europe and ongoing positive results for Corporate America. So the WTI prices rallied $1.48 to $81.87 a barrel recovering a big chunk of previous day’s losses.
Amid easing concerns regarding a slowdown in the global economic growth, demand for gold as a safe haven saw renewed weakness. At the same time, investors seem to favour the US dollar over gold pushing the precious metal $9.5 down yesterday to $1231.8.
Marius is a Dealer at Capital Spreads. His involvement with CFDs and spread betting started in 2008 after graduating from London Metropolitan University with a MSc in Finance. He contributes to the Daily Comment by providing a snapshot of the FX, indices and commodity markets (oil and gold).
Jonathan is a dealer at Capital Spreads. Having started his career in the city trading interest rate and bond derivatives in 2005, he then entered the spread betting and CFD industry in 2007 by joining the dealing desk at City Credit Capital. After successfully managing multiple asset risk books across the European, US and Asian time zones throughout the height of the financial crisis, he then took that experience to Capital Spreads in 2010.
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