European equities are in the red this morning as the severe sell-off that took place in the US on Friday spilled over to Asia last night, and the fallout is being felt in this part of the world. Traders viewed the 666 point fall on the Dow Jones on Friday as a bad omen, and the negative sentiment is still doing the rounds. Global equities have been overstretched for some time, and the fear about monetary policy tightening has prompted dealers to exit the stock market.
Ryanair (LON:RYA) shares are lower today after the company revealed solid figures for the third-quarter, but the cautious outlook spooked traders. Pre-tax profits rose by 4% and traffic jumped by 6% for the period. Average air fares declined by 4%, which is further proof the airline industry is very competitive. Traders place a lot more value in which the company is going over where the company was, and the less the optimistic outlook has prompted selling of the stock. The share price is down 3.4% today, and it has been in decline since August, and if the bearish move continues it could target 1400p.
EUR/USD is higher on the session has the dip in the US dollar and the impressive services data from the eurozone is helping the single currency. The greenback was firmer earlier session as traders were thinking about the strong US wage data from Friday, which prompted inflation fears and interest rates. Italian and German services PMI reports jumped to levels not seen since 2007 and 2011 respectively.
GBP/USD is still up on the day but took a hit after the UK announced services that failed to meet expectations. In January the UK services PMI report fell to 53 from 54.2 in December, and it missed the expectations of 54.3.
At 3pm (UK time) the US will announce the ISM non-manufacturing purchasing manager’s index, and the consensus is for 56.5, up from 56 in December.
We are expecting the Dow Jones to open down 140 points at 25,380 and we are calling the S&P 500 down 9 points at 2753.
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