European markets opened positively this morning from Friday’s close, with Utilities, Oil & Gas and Tech gaining a small lead early on – IPR and DGE lead.
Continuing with the present theme, today presents itself tentatively as ‘risk-on’, where those assets associated with attaining a risk premium are likely to be favoured and highly correlated with each other, owing partly to ETF-induced lower volumes and larger trade sizes.
In focus today will be whether US retail sales can help underpin a bid to a market faced with significantly darkening news flows from only a month ago.
From teasing new highs and watching paper profits fondly, spread trading investors are once again faced with the discipline of capital preservation rather than growth.
But if those who cycled capital from the year’s early winners into cheapening fixed income did so promptly, then they’re well positioned to take advantage of any natural price correction, euro-crisis induced or otherwise, to what was a period of strong performance for equities.
That said, however, Thursday’s Spanish and French bond auctions will be watched very closely.
Article by Spreadex.
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