Markets are in a very much risk off scenario with investors not wanting to start the year off with big losses so the riskier assets are suffering, such as equity markets. The turnaround this morning has coincided with upside in the gold price, confirming that investors are jumping into gold as the safe have, risk off trade.
China is still a worry, despite yesterday’s manufacturing data being more stating the obvious there are still worries about the stability of the Chinese economy and the ability of the rest of the global economy to come to terms with the new China, one that no longer looks to double digit GDP growth as the norm. Markets haven’t coped well with this up to now, and I think we are likely to see more in the way of volatility when big numbers break, even if they don’t stray too far from expectations.
Retailers are a drag as the next week or so is going to be key. Next today has disappointed and dragged Marks and Spencer (L:MKS) and AB Foods (L:ABF) down on the potential for bad numbers. Although Home retail are looking strong on broker upgrades.
Overall markets are totally undecided on the next direction so investors are unwilling to jump into any risky positions. Yesterday’s losses have spooked many and with US index futures all now looking negative for the open this afternoon the smart money will be on the losses being extended as we approach the Wall Street open.
Ahead of the open the Dowis expected to open lower by 109 points with the S&P500 lower by 12 points and the Nasdaq100 down 25 points.