Minutes from the Federal Open Market Committee (FOMC) released last night hinted towards further easing measures by the Federal Reserve, barring any indications of a significantly stronger economy. The news was sufficient to reverse the declines on US stocks, and set up European markets for a fractionally higher starts. Early enthusiasm for risk assets may also have been buoyed by better than expected Purchasing Managers Indices form Europe, showing improvement in the forward looking outlook from business in the manufacturing sector in France and Germany, and in the services sector in France. It also followed on from Chinese data overnight, with a HSBC Manufacturing PMI coming in at 47.8, below last month’s 49.3.
This did however begin to fade throughout the day, with markets generally losing ground as trade progressed. The major catalyst for a move down into negative territory was worse than anticipated initial and continuing jobless claims in the US. Additionally, the St Louis Federal Reserve President James Bullard, talking on CNBC, suggested that the FOMC minutes were slightly out of date given some improvement in economic fundamentals recently. His intimation that the QE the market is craving may be further away than this summer dented market confidence.
The FTSE 100 rallied from its lows here it had been close to 0.2% down, finishing pretty much flat for the day at 5777. This was a significant outperformance compared to European indices, with France and Germany approaching 1% losses for the day.