The European markets will start the week with a big decision to make today. Traders will have decide whether the recent run of strong performances is overdone or whether the strong end to the week was more than just a flash in the pan.

However with US markets taking their long weekend we may well find that thin volumes lead to a sever lack of direction for the major equity markets.

Friday’s non farm payroll number managed to keep the positive feeling flowing through equity markets. Many have started to believe that the weaker economic data that lead the Fed to extend their QE program is now done, and economic recovery can now resume.

This does however seem rather premature, so after today’s holiday economic data out of the US will be as closely watched as ever.

It’s not just in the US where data will be closely watched. With the BoE rate decision as well as industrial and manufacturing production numbers, the UK itself will be a hive of activity.

The rate decision on Thursday will undoubtedly take centre stage however anything away from expectations earlier than then will no doubt see interest in equity markets increase.

Notwithstanding the current hike in wheat prices there is evidence that inflationary pressures are receding while recent surveys covering construction, manufacturing and services activity in August have not painted a picture of an economy enjoying a robust recovery. Consequently, most economists think the interest rate will remain unchanged for the rest of the year.

Elsewhere in the spread betting markets, the recent flotation of loss-making grocery delivery firm Ocado has been described as one of the least successful in recent memory, but shares have perked up in the last week ahead of next Tuesday’s interim results.

Elsewhere in the grocery sector Wm. Morrison releases interim figures on Thursday, the first results to be released since Dalton Philips first sat down in the chief executive’s chair back in late March.

Ahead of the open we expect to see the FTSE open up 13 at 5,441, the DAX up 12 at 6,147, and the CAC up 9 at 3,681.

By James Hughes, Market Analyst, CMC Markets.

CFDs, FX and Spread Trading are leveraged products and carry a high level of risk to your capital. It is possible to lose more than your initial investment. These products may not be suitable for all investors, therefore ensure you understand the risks involved and seek independent advice if necessary.

Please remember CMC Markets provide an execution-only service. Any of the above comments above, our research and charting tools are indicative and provided for information purpose and must not be relied upon as investment advice.