Financial market research and analysis

European bourses are set to take the lead from a positive session on Wall Street and Asia overnight. A drive higher from tech stocks on Wall Street helped lift Asian equities after their recent battering, pulling them off 2-year lows.

Asian markets were ending the week on a positive note after sinking for 10 straight sessions, ending Wednesday, on rumours of trade talks between the US and China. The chances of these trade talks making any real progress look doubtful, especially given that they have failed so many times before; it is difficult to see why they might find more common ground on this attempt. However, in a display of optimism, the markets were willing to look beyond these concerns and realities.

The dollar held onto weakness from the previous session, pulled lower by disappointing consumer inflation data, which came hot on the heels of weaker than forecast producer prices, putting the greenback on course for its largest weekly declines since February. The weak dollar, combined with improving optimism over US-China trade talks, plus action by Turkey’s central bank to support the free-falling lira, means Friday is shaping up to have a more positive feel than we’ve seen for a while.

Breathing Space for Lira After Rate Hike

The Turkish Lira has regained at least some credibility after a sharp rate hike from its central bank to shore up the currency. A rate hike to 24% has shown investors that the central bank is prepared to act and act big if necessary to support the lira. This has provided some relief to the markets. Whilst this eye-watering level of rates will not reset attitudes and erase fears towards emerging markets, it is providing a strong buffer and allowing markets to breathe a sigh of relief.

Will Sterling Hold onto Gains Amid A Deluge of US data?

The pound has managed to maintain gains from the previous session following the rate announcement from the BoE. Traders are focusing more on the central bank lifting growth forecasts than the stark warnings that BoE Governor Mark Carney gave on the potential impact of a no deal Brexit on the UK economy.

On a quiet day for the UK economic calendar, whether the pound manages to hold onto its BoE inspired gains depends largely on the slew of US data due for release this afternoon. After the recent weaker than expected inflation data, investors will be watching US retail sales data closely for clues over building inflationary pressures. US manufacturing and industrial production are expected to tick higher, as is the University of Michigan confidence data, potentially showing that the US economy is doing a good job of shrugging off escalating trade tensions.

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