Global stock markets are continuing to trade in a timid fashion this Friday. Traders are understandably nervous about taking on any large positions going into the weekend after such a mauling the previous day. On the positive side, US markets are receiving lift with US consumer spending rising as Bush’s stimulus cheques hit. While this lift is at least creating a pause from the continuous stream of bad news, market participants are wary of reading too much into what may be a short term patch for the US economy. In the UK, Barclays is one of the largest fallers on write down fears, while understandably, energy stocks are the strongest with Tullow Oil up significantly. While Thursday was an impressive sell off, we doubt we’ve reached ‘puking’ point just yet. The VIX options volatility index is still some way off the January and March spikes and we are not seeing the same flight to safe havens such as short term fixed income that we saw in the first quarter. The Dow hit a new low for 2008 yesterday. We don’t think other markets will be long in following suit.
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