Now back from his half-term hols my wise and learned friend, who heads the equity sales trading desk at one of the larger banks in London, has this to say on the markets at the moment.
Some big moves in equity land last week, but volume appears to have been the main feature: not on Friday in the US, two-thirds of the day’s volume traded in the last hour, but month end window-dressing/profit taking, along with US$ watching appears to be the driver.
China PMI has spooked investors this morning, with the market preferring to believe the Flash HSBC version as opposed to the wildly divergent official release, which some might say could be open to manipulation.
Of the sectors, utilities have been the recent darling, but even they are now showing signs of weakness and healthcare continues to lag. As corporate earnings are now over for another quarter, sentiment is returning to macro events, with central banks meeting in Europe and the UK this week.
Continued talk of US tapering of QE is apparently worrying markets, but I continue in my view that this is a well-flagged event and is ultimately a sign of a strengthening economy, all we need is for someone from the Fed to make some bullish statement and we are back on the upward trajectory. Recent dips have been bookmarked by profit taking, so buy now and get long.
