With the Dow Jones forcibly dragged away from its record highs by the end of Thursday’s session, the European indices looked nervy at the start of February’s final day of trading.
The Dow’s rapid decline came as bond yields shot up across the globe, suggesting investors are considering the incoming injection of stimulus, a return to bolder economic growth, and what that means for inflation and, therefore, monetary policy.
If avoiding the kind of losses seen Stateside, the European markets nevertheless opened notably in the red.
The FTSE, which has a lot less flab to lose than some of its peers, dropped 0.2% to 6,635.
The UK index’s losses would have been more severe if GBP/USD itself didn’t contract by 0.6%, pulling the pound to an 8-day, sub-$1.40 low. This as an (over)eager dollar celebrated the prospect of the Federal Reserve potentially tightening its belt when it comes to monetary policy post-American Rescue Plan.
After fighting back towards 14,000 on Wednesday and Thursday, the DAX is back at 13,850, once shedding another 50 points. And the CAC is down 0.7%, returning to 5,750.
What could turn things around for Europe is a green US open. And, at present, the futures are pointing to a 50 point increase for the Dow after the bell, a rise that would push it back towards 31,450.
"Disclaimer: Spreadex provides an execution only service and the comments above do not constitute (or should not be construed as constituting) investment advice or recommendations, or a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. Any person placing trades based on their interpretations of the above comments does so entirely at their own risk. Spreadex Ltd is a financial and sports spread betting and sports fixed odds betting firm, which specialises in the personal service and credit area. Founded in 1999, Spreadex is recognised as one of the longest established spread betting firms in the industry with a strong reputation for its high level of customer service and account management.
In relation to spread betting, Spreadex Ltd is authorised and regulated by the Financial Conduct Authority. Spread betting carries a high level of risk to your capital and can result in losses larger than your initial stake/deposit. It may not be suitable for everyone, so please ensure you fully understand the risks involved."