After Monday put the markets back to roughly where they were before the bond tantrum last week – or at the very least on the road to a full recovery – Tuesday has seen European investors start with uncertainty in their step.
Sentiment was undermined early on by comments from Guo Shuqing, the head of the China Banking and Insurance Regulatory Commission. He said that the financial markets are running ‘counter to the real economy’, and that he is worried that the ‘bubble problem in foreign financial markets will one day pop’.
Guo is really saying nothing that investors, in their hearts, won’t – or shouldn’t – already be aware of. However, it was enough to halt the kind of bombastic growth that kicked off the month.
A further 0.3% retreat from GBP/USD – the pound is now at a 12-day low of $1.388 – allowed the FTSE to move the same amount but in the other direction, leaving it a few points past 6,600.
That slight increase meant the UK index was more energetic than its Eurozone peers, where the DAX and CAC added 0.2% and 0.1% respectively after the bell.
As for the Dow Jones, after closing above 31,500 last night – still around 500 points shy of last week’s record peak – the US index is heading for a 75 point retreat when trading gets underway in the States.
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