An overall positive morning for data – including a return to growth for China – didn’t mean as much to the markets as yesterday’s vaccine updates, meaning European started the session in the red on Thursday.
Coming in at the top end of analysts’ estimates, China saw a 3.2% expansion in the 2nd quarter, a sharp turnaround from the 6.8% contraction suffered in Q1. Fixed asset investment and the country’s unemployment rate both also beat estimates, while industrial production rose month-on-month. The one disappointment was its retail sales, which failed to climb into positive territory as forecast.
In the UK, the jobs data painted a mixed picture. The unemployment rate held at 3.9%, wages shrank slower than expected, and the claimant count change actually dropped by 28,100, after 2 months of 6-digit surges.
But, that doesn’t tell the whole story. From March to June 649,000 jobs have been lost. The self-employed suffered their worst quarter on record. Job vacancies are non-existent. Weekly hours worked from March to May dropped by 5.5 hours. And, reportedly, 29% of UK businesses are preparing to cut jobs across the next 3 months.
Confused by the jobs data, unbothered by China’s upswing – perhaps because the lockdown situation there was so different to what has been seen in, say, the UK and US that a comparison isn’t possible – and fatigued from yesterday’s gains, Europe opened at a loss.
The FTSE fell back under 6300 as it fell 0.6% – it cannot stay above that level for love nor money - while the pound dipped 0.2% apiece against the dollar and the euro.
The DAX was also down 0.6%, slipping below 12900, with the CAC retreating from 5100 with a 0.8% decline.
The Dow Jones, meanwhile, is heading for a 125 point fall this afternoon, one that would leave a good chunk away from Wednesday’s 27100 intraday peak.
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