The DAX continues to lead in Europe remaining under pressure despite another rebound in Volkswagen (XETRA:VOWG) shares in the wake of CEO Martin Winterkorn’s departure. The rest of the auto sector remains under pressure over concerns that other companies could become implicated in the “defeat device” fallout. BMW (LONDON:0O0U) shares have dived on a report that the diesel X3 emits more emissions than the VW Passat according to a report in AutoBild.
Today’s German IFO business survey reported an improvement in economic sentiment in September, but this survey was done before the VW scandal broke and it is quite likely given the repercussions this event is likely to have on German supply chains that if the survey were done now the result would quite likely be very different. Next month’s survey could well be quite different in tone and sentiment.
US markets look set for a flattish open today after a negative session yesterday as attention shifts to a speech later today by Fed chief Janet Yellen on ““inflation dynamics and monetary policy” a topical subject given the lack of any. It is also relevant given the line in the Fed statement about global economic events putting downward pressure on inflation in the near term.
Expectations surrounding the Fed’s intentions are growing given we’ve seen further rate cuts this morning from the Norwegian central bank and the Taiwanese central bank, begging the question as to whether the Fed can honestly look at tightening monetary policy at a time when 40 central banks have eased policy this year alone.
We’ll get an insight into the mind of the US consumer later today with the latest durable goods orders for August with expectations that core orders will rise 0.1%, down from a revised July number of 0.4%.
It’s been one of the many mysteries of the improvement in the US economy that despite the slide in fuel prices in the last 12 months we’ve seen a marked reluctance of the US consumer to indulge in larger ticket purchases. Core durable goods still remain in negative territory year to date, currently down 0.9%.
On the earnings front we get the latest quarterly earnings numbers from Nike (NYSE:NKE) and with China a key market for the US sportswear company it will be notable as to whether it will be able to replicate the strong numbers we saw at the end of the last quarter, which saw revenue growth of 5% in Q4 2015 for the whole business but a 20% revenue rise in China.
Weekly jobless claims are expected to increase slightly from 264k to 275k.
- The Dow Jones is expected to open 15 points lower at 16,260
- The S&P500 is expected to open unchanged at 1,938.0
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