Bullish October shows that investors were not spooked

OCTOBER has a reputation for being a troublesome month for financial markets, and memories of the 1987 crash still linger. So stock market bulls have been cheered by the four-week rally, although there are fears that fresh buyers are reluctant to step in at current elevated levels.

This week brings a string of important economic data kicking off with the Chicago PMI this afternoon. Tomorrow we have a second look at Chinese Manufacturing PMI. Last week’s flash number cheered investors as it indicated growth after three months of contraction.

We’ll also get the first look at third quarter GDP for the UK. This is dangerously close to falling into negative territory.

Last week, MPC member Paul Fisher warned that there was a 50:50 chance that the UK economy would contract in the fourth quarter this year. If so, then additional quantitative easing is on the cards, despite stubbornly high levels of inflation.

GFT quotes two-way prices on stock indices around the clock, even when the underlying markets are closed. The FTSE 100 index is called to open up six points at 5708. The German DAX is expected to open up 14 points at 6360 and the French CAC 40 is forecast to open 10 points higher at 3358.

This week also sees central bank rate decisions for the US, UK and Europe. Mario Draghi presides over his first ECB meeting and speculation is mounting over whether he will take this opportunity to cut the Eurozone’s minimum bid rate or not.

Friday brings the latest update on US unemployment when the Non-Farm Payroll number is announced. Last month saw an improvement and a welcome upward revision to the last two releases. However, the US employment situation remains dire with job creation failing to absorb the estimated 125,000 new entrants into the workforce each month.

Investors will also be paying close attention to the G20 meetings which begin on Thursday in Cannes.

Martin Slaney is director of global product management at GFT