Cautious opening on European markets

Shares across the European bourses opened cautiously this morning. With much of the turmoil of last week, the bourses are expected to progress at a slower pace this week. Data due out in the next few days from the USA on wages, inflation and retail sales will temper any sudden movements.

Markets are still in the process of taking stock from the Fed’s pause on interest rates, with uncertainty about whether it’s a short or long term halt. Meanwhile, across the rest of the world central banks have indicated that they will need to continue the increase in rates.

At home in the USA, analysts are beginning to worry that a general slowdown in consumption by US consumers may precipitate a global slow down – with even mention of ‘R’ word beginning to rear its ugly head from commentators. Surely, they argue, a slow down in the housing market, and no real growth in other sectors will mean less cash for the US consumer to spend on imported goods, goods which are getting more expensive as the dollar weakens against the basket of global currencies (of course the only ones we’re really referring to are the Chinese RenMinBi and the Japanese Yen).

In the UK the central bank has effectively confirmed that it will continue to increase rates. The housing market has taken an unexpected upward movement over the last few months, with little reason to suspect that it will slow down until higher rates kick in. The Brits and the Australians, we must say, certainly seem to be using their houses as bottomless piggy banks.

In France, there has been a lull as virtually the whole population ‘clocks off’ in August for holiday. Paris is currently a ghost town – it would be full of American tourists, but unsurprisingly the number of transatlantic travellers has decreased a little more than usual.

So the markets, pause – a brave face is put on and everyone looks on there screens every few seconds to see if the ‘cease fire’ in the Middle East holds (of course we mean Israel and Lebanon not Iraq or Afghanistan).

Even BP seems to have some cheery news this week, that its oil pipes aren’t as bad as they feared.

Expect Wall Street to be up, slightly, then pause for the figures.