Stock Market Trading: 10 January 2014
European equities are set to open with gains this morning, clawing back some of yesterday's losses.
Despite a host of economic data and central bank releases, markets are practically unchanged on the week as traders narrow in on today's Non-Farm Payrolls report and US unemployment figures.
Although traders now seem more comfortable with the idea of the Fed beginning to taper, questions are now being asked about whether good news is actually good or bad with regards to interest rates.
With the recovery firming up, and Janet Yellen suggesting that this could accelerate during 2014, it's only natural for the question of the first interest rate hike to get some attention.
Despite all the attempts at forward guidance from the Federal Reserve, anything that moves the US closer to that 6.5% unemployment rate will instinctively get traders hot under the collar.
Ahead of the Non-Farms report, US investors were not really in the mood for pushing equities either way during yesterday's session.
Instead, they decided to wait for the jobs data to give clues about whether the Fed will continue tapering.
In addition, the retailers disappointed, pushing the Dow Jones 10 points down to 16,449, with aluminium producer Alcoa
also missing estimates and plunging during overnight trading.
Consensus expectations for the NFP point to an increase of 196,000 jobs.
Stock Market Trading: 09 January 2014
Another flat start is expected today as traders continue to wait and see what headwinds the central banks will drop on the markets.
With the Fed minutes out of the way during overnight trading
, and not too much to price in this morning, traders will be hunkering down ahead of today's BoE and ECB meetings.
Whilst both institutions are set to stand still on monetary policy, it will be the attempt to massage market expectations with their words that will captivate attention.
Bulls are hoping for a large dose of dovishness at the ECB press conference as Mario Draghi tries to stave off deflation worries.
In addition, hopes are brewing that Mark Carney will continue with his penchant for surprise statements and attempt to push back rate hike expectations.
Minutes from the Federal Reserve's December meeting highlighted policy makers' concern that the record asset buying program may start to pose a risk to financial stability if kept unchanged.
The market reaction was rather muted, with the Dow trading at around the same level since the announcement.
Overall, the Dow retreated 62 points to settle at 16,459, although most of the decline came during the early part of the session.
Stock Market Trading: 08 January 2014
A flat start is expected for European markets today as traders prep themselves for a barrage of sentiment deciding releases.
Whilst stocks did manage to tick a little higher yesterday, the rally still feels as though it's on slightly soft foundations.
As a result, traders will be looking for confirmation that the central banks have got the global economy on firmer footing.
Today's BoE Credit Conditions Survey is expected to confirm that lending to consumers remains loose and should provide some optimism that the UK consumer can continue their recovery.
However, the main event for global financial markets will be tonight's FOMC minutes.
These will be released after the European close, so we may see a fairly muted session as traders decide to wait until tomorrow before giving their verdict.
Optimism returned to the US equity markets yesterday as the trade deficit unexpectedly dropped to a four year low of $34.3bn in November.
The start of fourth-quarter earnings season could also be an extra source of confidence and so the Dow Jones recovered 100 points to 16,520.5.
Stock Market Trading: 07 January 2014
European equities are set to start with modest gains on the open, but don't read too much into it as the financial markets have yet to find their rhythm for 2014.
The few trading sessions we have seen have been quite choppy and, whilst one could put that down to post holiday low volumes, there's been a lot of speculation about how this week's data and central bank meetings will shape market sentiment.
The question of whether or not equities are justified at these levels still needs to be answered and, whilst the bulls have lost their bravado, there hasn't been anything overly negative for the bears to get stuck into.
For that reason, traders will probably be heavily focused on the central bank meetings and US jobs data later on in the week.
We saw another volatile session yesterday, with attempts to break in either direction bringing counterbalancing action.
Despite this, the slower than predicted growth for US services, as shown by the ISM's non-manufacturing index, did manage to see the Wall Street index
close 61 points lower at 16,403.
Stock Market Trading: 06 January 2014
European equities are set to edge lower on the open as Asian weakness taints the real start to the year for financial markets
Overnight, the HSBC Chinese services PMI came in weaker than expected, compounding the caution stirred by the softer official figure last week.
As the first full week of 2014 gets under way, there'll be no gentle introduction as we see a jam packed economic calendar full of heavy hitting economic data and central bank meetings lining up to test traders' metal.
The stellar performance from equities last year has certainly been rewarding for those who were long, but the divergence from their lacklustre underlying economies hasn't gone unnoticed.
The big issue for traders this year is whether the optimism priced into markets can come to fruition in the global economy or whether the weight of stagnant growth will drag the markets back to reality.
After surging sharply in the last two weeks of December to reach a record 16,598, the Dow Jones started 2014 on the back foot.
On Friday, it struggled to recoup the steep losses from the previous day and, although it did finally post a gain of 25 points to 16,468, trading seemed to be choppy.
On his way out, the current Fed Chairman Ben Bernanke said the US is poised for faster growth this year.
Will that mean another string of higher highs for 2014?