The Week Ahead

Good afternoon.

A mixed session overnight saw the Hang Seng lead the losses, with the Australian ASX 200 providing the only area of positivity in the region. Coming off the back of a week of losses in US markets, the cautious approach seen in Asia does reflect fear of another leg lower elsewhere. Japanese PPI inflation remained highly elevated, with the reading of 5.5% just marginally below last month’s multi-year high of 5.6%.

On the back of this we weren’t expecting big things on the European open so it was a pleasant surprise to see stocks take a positive turn. It’s possible that the negativity in the US dragged Europe down on Friday afternoon and this morning is simply a rebalancing without the American sellers.

The FTSE is up 0.65% and the CAC and the Dax up 0.70% and 0.92% respectively. European investors continue to digest the European Central Bank’s decision last week to slow down bond buying under its pandemic emergency purchase programme. Slowing down the programme might mean less money being put into the system, but it doesn’t have to mean a drop in equity valuations, so this could lead to some buying each dip; time will tell.

There is plenty of inflation and labour market data out this week for the US, India, France and the wider EU which could have a broader impact on prices. Any signs of interest rate rises being brought forward could lead to concern from investors. Economists are expecting US inflation to have hit 5.3% in August and any significant variation of this on Tuesday could lead to some volatility.

Have a great week on The Portfolio Platform, and let’s hope this bullishness continues.

This article was brought to you by The Portfolio Platform, a investment platform designed by professional traders, for the retail market. You can now autotrade their strategies and capitalise on opportunity.