Trick or treat on final day of the month?
The final day of the month is shaping up to be a treat for investors following what has been an otherwise shocking month for stock markets.
Positive momentum has been gathering throughout the Asian and European sessions in what investors will be hoping is a sign that the worst of the sell-off is behind us. October has truly lived up to its reputation this year, with the major indices in the US wiping off all gains for the year and entering correction territory along the way.
The way markets have traded recently, I wouldn’t exclude the possibility that October has one more trick in store, but the start to trade today has certainly been encouraging. Volatility remains high and with it, anxiety, but if we can get through the next couple of days relatively unscathed, investors may start to smell opportunities and bargains and the tide could turn back in favour of the bulls.
Oil correction over?
Oil is riding the positive momentum wave higher this morning, paring some of its recent losses having also suffered at the hands of the October effect. Of course, there have been other factors at play, but in a similar manner to stocks, traders may now be looking at oil and see the sell-off as being overdone. I think we’ll have a better idea of traders views on oil later on today following the release of the EIA inventory data. A build of 5.7 million barrels, reported by API on Tuesday, was effectively shrugged off by traders. Should the same happen following the EIA release today, it may suggest the correction has run its course.
Gold shows anxiety remains
Gold is trading around 0.5% lower this morning as risk appetite picks up but what’s interesting here is the declines are much less significant than the corresponding gains in risk assets. I wonder whether this is a sign of the still underlying caution among investors, still unsure that any bounce has the resilience to withstand the next test from above. The more we see the bulls retake control in stocks, the more these moves in Gold could fade.
Data and earnings keep traders busy
As is the case for the rest of the week, there’s plenty on the calendar today for investors to focus on. It’s been a busy week for earnings and we have another 37 S&P 500 companies reporting today. The big economic releases may be coming later in the week but ADP non-farm employment, US employment cost index and EIA crude inventories today should be enough to keep us busy.
