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The market recovered from a difficult test yesterday. By about mid-morning the equity market was hurting, with not the normal underperformers dragging indices lower but the recent winners – the golden stocks. Companies that had experienced great praise from the market over the last twelve months were subject to a heavy repricing of risk, one that took the easyJets, ITVs and Ashteads of the market much lower. But the selling stopped and stabilised – at least for everything else. 

The market managed to close out the day higher after being down by approximately one percent. The recovery came from unloved sectors, like banking, mining and pharma. Investors will keep a very close eye, however, on the continued performance of the so-called hot stocks, as their price action can lead the broader market. It’s either a temporary correction in prices or a sign of more to come, and identifying which one has never been more important. 

 Overnight in Asia, emerging-market shares slid for a third day on news of the slowest Chinese money supply growth in almost 13 years. Investors later today will look to earnings from US mega-caps for guidance.

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