European and US markets could well be in for a quieter session today after yesterday’s volatility as the economic calendar is looking a little light of any real data from Europe or the UK. However It cannot be ignored that Asia has managed to buck the trend and post gains overnight after a poor session in Europe and the US.
However the dominating force behind market volatility is likely to remain the crude oil price today as focus will shift to Russia and the almost 6% fall that we saw in the Russian Rouble during yesterday’s session. The oil price is also dominating movements in equity markets throughout Europe, however a move towards $70 is likely to calm investors somewhat.
With a lack of data from the economic calendar today there will be growing focus on the UK chancellor and his autumn statement that is due on Wednesday. There always seems to be the obvious questions when it comes to the statement and one of those is always what does that the city of London look for during these types of events. The honest answer to this is that very often they don’t look for too much. Things like the Autumn statement and the budget are seen as very much political events to traders and political events are usually ignored.
However it’s the economics that become the most important for markets, so all eye will be on the projections for the likes of GDP inflation and most notably the country’s debt. The chancellor will be want to remind us all that this is an election year, hence why we have already been told about an extra £2bn for the NHS, but what will be asked in the city of London is where is that money going to come from? All in all as long as Mr Osbourne doesn’t change his outlook from what Mark Carney told us at the inflation report last week then the markets may well get away from Wednesday budget unscathed.
Later in the afternoon US markets will give us some much needed economic data but it will still be the case that the oil price dominates proceedings. The will also start to gear up to some of the big economic data later in the week. The fact still remains that the US economy is still in a very positive place and that the Fed is still on track with monetary policy to raise rates in the middle of next year.
We are even getting to a situation now where markets are finally seeing positive economic news as good news for the markets instead of looking at the potential hawkish or dovish stance that leaves the central bank in.
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