European stock markets are set for a small rally as the fourth quarter gets under way today, but more US data will keep investors standing close to the exits.
Market watchers expect the FTSE 100 to scrape a 10-15 point advance at the opening, small compensation for yesterday’s 4.8 per cent plunge to a close of 3,721.8.
In Paris, the CAC 40 rose 0.5 per cent, Frankfurt's Xetra Dax 30 rose 0.7 per cent and the FTSE 100 in London was 0.1 per cent firmer after unexpectedly weak economic data, disappointing corporate news and fear of war sent the benchmark indices more than 5 per cent lower yesterday.
Mr David Buik at Cantor Index said the market remained extremely fragile, hobbled by worries of conflict in the Middle East and depressed by a stream of poor US company outlooks and data showing the US economy remains sluggish.
"Today we think there will be a slight rally but I would be wary. I think we can go back down to 3,500 and we could lose another 500 points on the Dow before we straighten out," he said. He noted that the upcoming third quarter US company reporting season would be important.