Overnight, US stocks lost early gains yet again as the pattern of late-session selling continued.
This was despite cautious optimism from Federal Reserve chairman Ben Bernanke and the Federal Reserve’s Beige Book pointing towards a modest improvement in the economy.
After being up more than 100 points and above the psychologically important 10,000 level, the Dow Jones Industrial Average was the best relative performer, closing down 0.4% at 9899. The NASDAQ fell 0.5%, while the broader-based S&P 500 lost 0.6%.
The market continued to trade erratically overnight, marked by rife indecisiveness. We’ve seen reassurances indicating the US economic recovery is continuing; yet no one has the confidence to step up to the plate and put meaningful amounts of money to work, despite extremely compelling long-term valuations.
In Asia, regional markets are mostly higher this Thursday, choosing to shrug off the weaker US leads and focus on a stronger-than-expected regional data suggesting that European issues have yet to impact growth rates. As at 06:15 the Nikkei 225 and the Kospi are best performers, both up 0.6%. The Hang Seng is firmer by 0.2% while the Shanghai Composite is 0.5% lower.
In Australia, the ASX 200 is currently higher by 1.1% at 4432, just off its intra-day highs of 4445. The gains for the day are broad-based with the heavyweight materials, financial and energy sectors all seeing solid buying support after a surprising fall in Australia’s unemployment rate and stronger-than-expected export and housing price data out of China.
Turning to Europe, there's no escaping the eurozone debt woes and as the common currency slipped lower yesterday, any optimism that had been accrued by equities seemed to edge away too. The Dow closed just below the 9,900 level as a result and gold is once again finding itself in favour, suggesting European markets will again take a tumble at the open. With this coming in spite of the modestly upbeat comments from Ben Bernanke yesterday, and the fact the Fed's beige book is looking more optimistic, it is serving to underline just how much caution there is in the market right now.
We have some notable fundamentals due in the coming hours with the Bank of England and ECB rate verdicts, plus German CPI data. Earnings news on the other hand remains somewhat thin on the ground, although highlights include earnings from the UK's Home Retail group and monthly traffic figures from Lufthansa in Germany. BP remains in a woeful state, with the US traded ADR's heading down to 14-year lows last night after collapsing by around 15% following the close of London trade. The stock will be closely followed at the open and is likely to weigh on the London index as a result.
Ahead of the open however we're calling the FTSE down 61 at 5025, the DAX down 39 at 5946 and the CAC down 33 at 3414.