NDX

The US markets will be closed as Americans observance Independence Day. Consequently we are expecting to experience a quiet afternoon session. Today's big moves may have already occurred.

The second quarter earnings season has started brightly with the likes of Alcoa, JP Morgan and Citigroup all reporting numbers that were better than expected last week. The good run of form has continued at the start of the week as the Bank of America became the latest Wall Street giant to report forecast-beating numbers this morning, which caused its shares to climb some 4 per cent higher. This helped to keep the S&P 500 hover near its record high levels hit last week, though the markets have struggled to push further higher. It is a quiet day in the markets and ahead of the key earnings releases, not many people are willing to build aggressive positions and some are taking profit given the sharp rally over the past several days. The bears are largely on the side-lines, for now, as their recent efforts to push the indices lower continually failed.

The global equity markets have endured a rough few sessions. Evidently, traders have been piling in on safe haven assets like gold and silver, yen and benchmark government bonds, causing their yields to fall to dangerously low levels. Yields on the 10-year German bunds have dropped below zero for the first time ever, while in Japan bonds with maturities up to 15 years yield zero or less. Among other things, the rise in risk loathing is due to concerns about the economic implications of a potential exit of the UK from the EU. In recent days, “Brexit” concerns have intensified with new opinion polls showing the “remain” camp’s lead narrow. Indeed, the probably of remain has fallen to just 55% from around 64% on Monday, according to betting odds from Betfair.

Equity markets have surged higher in recent days, with investors more or less ignoring the slowing down of economic growth in China as well other global macro risks. China’s factory activity has weakened to its lowest level since November 2011, according to the closely-followed manufacturing PMI. Now, Moody's has revised its outlook on the world’s second largest economy to negative from stable. In Europe, economic growth has been virtually non-existent and the latest PMI readings on the UK economy have been weaker, too. There is also the potential for Britain to exit the EU which together with the on-going refugee crisis has raised a lot of question marks over the whole European Union project. In the US, the political situation is uncertain with the elections looming large later in the year. US corporates have also been stuck in an “earnings recession,” with the S&P 500 company earnings declining for the third consecutive quarters.