Nomura expect sentiment to remain week through until October 9.
From an overnight piece, prior to Wednesday's falls:
- If the historical pattern in sentiment in circumstances like the present is any guide, we would expect the cooldown in global stock market sentiment to last through perhaps 9 October.
- When sentiment cools, the market tends to react asymmetrically to the incoming news flow, becoming more sensitive to bad news than to good news.
- Given this tendency, we think that the unexpectedly weak ISM manufacturing PMI … was probably more of a catalyst ... than a genuine cause of it.
Nomura advise to
- stay on guard against a risk-off phase that we think may continue for as long as the cooldown in sentiment lasts
