Markets drift after yesterday s correction

European markets drifted as investors licked their wounds after yesterday’s correction to the downside. Banks and miners weighed on the index as dividends in heavyweights, HSBC, Vodafone and Barclays took 10 points off the FTSE 100. Sentiment remains cautious after the aggressive sell offs that beset the markets yesterday.

Concerns over possible Chinese rate rises, a slowing in global demand and more pertinently the Euro debt crises culminated in an aggressive sell off across equity markets. The ongoing saga with Europe’s debt crises seems no closer to resolution as Ireland continue to assert that no help was needed, whilst the market believes a bail out is inevitable.

In the background and weighing on commodity stocks is the continuing concern over Chinese growth fears and a possible rate rise, with the perceived impact on global demand, mining stocks have reversed nearly 10% since last Wednesdays highs on fears that any slowdown on Chinese growth would considerable dent global demand and impair commodity prices and in turn commodity stocks.

On the upside broker ICAP posted beat expectations with better pre tax profits, pushing the stock up 0.5%. Positive numbers come on the back of a relatively quiet summer in the markets, so expectation remains high that the brokerage will be well places to benefit from more active markets since the second round of Quantities Easing. Investors remain cautious waiting for further guidance from European leaders on the Irish situation, until then it’s unlikely that traders will be tempted back into the market, indicating that until some resolution over Ireland emerges we could be set for further volatility to the downside.