The ‘wall of worry’ appears to be getting bigger, with investors trimming some positions after a good run that has seen some markets hit new all time highs.
The situation in Turkey continues to provide cause for concern, as it becomes more and more apparent that President Erdogan is taking this opportunity to tighten his grip on the country in a way that will concern both the EU and NATO. Turkey’s strategic position means developments here will be keenly-watched, with a shift to authoritarianism hurting the nascent rally in emerging markets.
With risk appetite on the wane for now, it is not surprising to see miners take a hit, with Rio Tinto’s decision to boost iron ore output resurrecting the ghost of vast surpluses of metals. Now might not be the time to be putting a foot on the production accelerator, but management can hardly be blamed for seeking an escape route after a long period of difficult trading.
UK price growth bounced in June, according to data from the ONS, but this has done little for sterling. Already thoughts have turned to the August BoE meeting, when easing is likely to arrive.
While we have yet to see cable make a fresh push to the post-Brexit lows, it seems hard to envisage an environment where the pound can rally. After Netflix’s disappointment last night, much focus will be on US tech stocks, with the Nasdaq’s remarkable rally now looking quite overextended.
Ahead of the open, we expect the Dow to start at 18,498, down 35 points from last night’s close.
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