It’s been a very quiet week in the financial markets and European indices are on course to end on a mixed note, while US futures are pointing to a slightly weaker open.
The FTSE and the pound are being well supported again today after the latest YouGov poll showed a u-turn in the voting on Scottish independence with 52% of people saying they would vote no.
While this isn’t exactly a huge swing in the voting, with the previous poll showing 49% against independence, the mere fact that its moved in favour of staying a part of the United Kingdom has brought some calm back to the markets.
The worst part of all of this is the fact that no one really knows what will happen if Scotland votes for independence and it’s that uncertainty that is freaking people out.
With the UK enjoying a strong recovery at the moment, especially compared to the US and the Eurozone, this is the last thing it needs.
Once this vote passes and the people of Scotland vote to remain a part of the UK, which I am sure they will, people can once again start to focus on the good news story that is the economic recovery.
US Recovery Still Reliant on the Consumer
The fresh batch of economic sanctions that the EU has imposed on Russia are likely weighing on sentiment today, which is probably largely responsible for the weaker end to the week.
We have already seen that these sanctions don’t only harm Russia, there are consequences for the countries imposing them, and while they are necessary, the markets do not respond well to them.
The US session today is likely to be another quiet one although there are a couple of notable economic releases for traders to watch out for.
The numbers give an overview of how the consumer has been spending of late and how they are likely to act going forward, so they are likely to be tracked very closely by traders and could have a significant impact on the markets.
The consumer is extremely important to the US economy and any drop is spending or confidence will be concerning.
As it stands, we’re expecting a 0.6% increase in retail sales and a rise in consumer sentiment to 83.2 which is very encouraging.
The US recovery has been very strong over the last six months and if it continues at this pace, the Fed will have to consider bringing forward its first rate hike.
We’ve already seen this week that investors are starting to price this in after rumours surfaced that the Fed will not release such a dovish statement next week, withdrawing its commitment to keep rates low for a considerable amount of time after the end of asset purchases.
If this does happen, we may well see further pricing in of an earlier rate hike.
The S&P is currently expected to open unchanged, the Dow down 3 points and the NASDAQ unchanged.
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