Friday’s increasingly looking as if it was little more than a pause for breath in the market’s current rout, with futures suggesting we’ll seem fresh losses on Wall Street at the opening bell. Earnings season may have got off to a reasonable start on Friday, but that doesn’t really detract from the divergence between rising interest rates and such toppy equity valuations. On top of this there’s growing concern that relations between the US and Saudi Arabia could deteriorate sharply over the disappearance of the Washington Post journalist who was critical of the Saudi regime. Oil prices have risen a shade amidst speculation that Riyadh could retaliate sharply in the event that Washington attempts to impose sanctions, but the reaction so far has been muted. Ultimately, a stand off like this is unlikely to do much to help stabilise a global economy that’s already struggling to grow.
Q3 earnings from Bank of America will be in focus, as will US retail sales – both due before the opening bell – but against a backdrop that once again highlights the potential for geopolitical and macroeconomic factors to dominate, the classic fundamentals seem unlikely to provide the real direction in the short term.
Ahead of the open we’re calling the DOW down 160 at 25180 and the S&P down 18 at 2749.
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Yields are up, but it was a tale of two divergent tapes in US equity markets; Oil heads lower as dollar strengthens; Gold takes the express elevator down