Equities Update

Last night's Beige Book assured the market that the Fed is halting their rate cycle and USD immediatly dropped massively lower.

The key take-away for equities from the Beige Book is that a) growth is slowing and b) inflation remains elevated.

The weakness in housing was once again mentioned with fewer and fewer regions seeing robust demand. This is the worst for stock markets but so far, the price action remains bullish.

But, if you consider the US market right now there's a distinct dispersion: everything growth related is being punished while defensive sectors are being bid up. Quite an interesting situation, we feel, and one that at least hints that the rally isn't as strong as concensus is starting to believe.

Indices indicated higher this morning on the back of Asia's advance. DAX seen at 5625, well above the recent range 5540-5600 and so if it can sustain this break, 5730 is the next major level. Both FTSE and SMI look stronger than DAX from a technical perspective.

Later on today, we have both US durable goods at 12.30 GMT and new home sales at 14.00. Tomorrow's GDP and PCE also in focus.