US indices are expected to open higher on Monday following an awful week that saw the Dow slip into negative territory for the year, while the S&P suffered four consecutive losses to end the week down more than two and a half percent.
Ahead of the open, the S&P is seen 6 points higher, the Dow 40 points higher and the NASDAQ 11 points higher.
Despite this slightly positive start to the week, there does appear to be a little caution in the markets.
Investors are a little concerned that the sell-off which started last week is not offer and could lead to something much bigger.
Given the significant increase in the number of warnings related to the stock markets as of late, this worry of a larger correction every time we see a bad week is hardly surprising.
However, if you look back at the three other times that we’ve had poor weeks, the markets have bounced back pretty quickly so all this worry may be short lived.
Fortunately the week is looking data heavy which could provide plenty of support for the markets, especially when you look at the data we’ve seen recently, with everywhere except the Eurozone enjoying a pretty solid second quarter.
Today is one of the quieter days though, which may just give the markets some time to absorb all of the events from last week.
UK and European Data at Odds
The morning has been pretty quiet in Europe as well, although there has been a couple of noteworthy data releases.
The one that stands out was the UK construction PMI which aside from exceeding expectations with respect to the headline number, contained some very encouraging points in the report.
The rise in residential construction in response to increasing demand along with the record increase in job creation is very positive, with the latter pointing to a sustained improvement expected in the sector.
The other notable release was the Eurozone sentix investor confidence figure which fell to 2.7 in August from 10.1 the month before.
This is the lowest reading since August last year and once again highlights the slowdown being seen in the region, not to mention the value that is no longer seen here.
This could all feed into the euro weakness that many expect going forward, with investment in the region still weak and stocks and bonds now looking far from the cheap alternatives they were a year ago.
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