We have seen a late recovery in Asia that has largely been as a result of some late state intervention in Chinese markets to help keep a floor under stocks.

Michael Hewson

Categorized in : Company News

There is a sense that with October’s reputation, worries about surging energy prices, supply chain disruptions, concerns about inflation and power shortages, October could be a fairly windy affair.

In light of recent events in western Europe, the flooding, the last thing that Europe needs at the moment is a tightening of monetary policy.

The ECB is going to do precisely what the market expects, in light of recent events in western Europe, the flooding, the last thing that Europe needs at the moment is a tightening of monetary policy.

Companies are generating fairly decent profits, they are taking people on. The big question is whether the current rebound is sustainable in the short to medium term, but it does look that way.

I have seen nothing in this week’s price action to change my view that ultimately the economic prospects in the short to medium term look fairly positive, though events in India could derail any global recovery, particularly if COVID variants migrate out of India, companies are generating fairly decent profits, they are taking people on. The big question is whether the current rebound is sustainable in the short to medium term, but it does look that way.

The initial optimism of early this year is starting to dissipate because of the prospects of tighter pandemic restrictions for longer, and concerns over ‘vaccine nationalism’.

We could see much more choppiness and much more volatility. We have a bit of a perfect storm heading into the month end, which is weighing on equity markets, but I don’t think at the moment we are in a place where it’s going to come crashing off.

In the space of a few days we appear to have swung full circle; with investors seemingly convinced that the problems in the Middle East appear to have settled down, at least for the time being, investors now have the opportunity to focus on the signing of the new U.S.-China phase one trade deal next week, as well as the health of the U.S. economy today, and in particular the labor market which has continued to look resilient.