- Relief rally over?
- China keeping investors unnerved despite higher CPI
- FTSE in the red, retailers mixed
- US stocks set for higher open
The relief rally in European stocks looks to have petered out after three days. This was always the risk with a lot of remaining uncertainties surrounding China’s economy and government policy. Wall Street couldn’t maintain early gains yesterday and ended up closing lower, which has translated into a lower start in Europe.
There are various moving parts in China that are keeping investors unnerved. Consumer prices rose by 2%, the largest increase in over a year but producer prices slumped 5.9% on slowing demand for industrial goods. Capital outflows following the devaluation of the yuan clearly have Chinese authorities worried and there are reports that capital controls are being tightened in response.
Those worried about an imminent drop in the yuan causing another sell-off in global markets may have some respite, at least in the short-term. A 1% jump in the offshore yuan to its highest since August 12 on Thursday can perhaps be explained by PBOC intervention to fend off fund outflows. The G20 meetings and Chinese president Xi Jinpeng’s upcoming visit to Washington to meet US president Obama are political reasons China will wish to keep the yuan “steady” for the time being.
UK stocks are lower in early trading following a mixed bag of retailer results and weakness in mining companies ahead of the latest Bank of England rate decision.
Next was a top riser after beating earnings expectations and taking a more muted stance that Whitbread (LONDON:WTB) on the minimum wage, saying it was manageable. Dixons Carphone (LONDON:DC) shares jumped after sales rose but a fall in sales at Argos hurt Home Retail Group Plc (LONDON:HOME) results sending shares lower.
US stocks look set for a higher open on Thursday. Shares of Apple dropped alongside wider markets on Wednesday following the release of the Apple iPhone 6s and a revamped Apple TV and iPad. Apple’s product launch was a bit of a damp squid with nothing exciting enough to justify Apple shares (NASDAQ:AAPL) sailing higher against a tide of weaker markets.
USA pre-opening levels
S&P 500: 23 points higher at 1,965
Dow Jones: 181 points higher at 16,434
Nasdaq 100: 47 points higher at 4,300.
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