Europe
European equity markets started got off on the wrong foot this morning as economic indicators from China pointed to a slower rate of growth. The retail sales, industrial production and fixed asset investment figures all came in below economists’ expectations and grew at a slower pace than the previous reading.
The Chinese figures set the tone for the day, and the spike in sterling on the back of the Bank of England update weighed heavily on the FTSE 100. The British index is paying the price for a strong domestic currency.
The mining sector is feeling the pinch due to the Chinese numbers suggesting a slowdown in the country, which is a major importer of minerals. BHP Billiton (LON:BLT), Glencore (LON:GLEN), Rio Tinto (LON:RIO), and Anglo American (LON:AAL) are lower today.
Next (LON:NXT) raised its full-year guidance for sales and profits, which was very well received by the market seeing as the company has been under the cosh lately. The update was by no means glowing, but it’s a step in the right direction. The share price is up 13%.
Shares in Morrisons (LON:MRW) are down 5.3% after the retailer announced a slowdown in the sales growth. The supermarket is still making headway with its turnaround plan, but traders were quick to jump on the cooling of revenue growth. The share price has struggled to make headway above the 250p region this year, and it would need to be cleared if it wants to return to 300p.
US
The Dow Jones and the S&P 500 are broadly unchanged on the day, but both indices have new record highs within reach. Given last night’s performance in the US, we appear to have returned to the positive form of US equities where they go on to set fresh records daily.
The jump in US inflation to 1.9% in August from 1.7% in July, and the drop in US jobless claims to 284,000 from 298,000 points to an improvement in the US economy. It is worth noting the jobless number is still above pre-Hurricane Harvey levels, but a step in the right direction is welcome.
Energy stocks like Chevron (NYSE:CVX) and Exxon (NYSE:XOM) are posting some of the biggest gains on Wall Street on the back of stronger oil price.
FX
The GBP/USD hit a fresh one-year high today after the latest Bank of England meeting was more hawkish than anticipated. The UK central bank warned that it may reduce the stimulus package in the coming months. The BoE also anticipates inflation to top 3% next month. The pound has been broadly gaining ground versus the greenback since January, and the momentum is with the buyers.
The EUR/USD is a touch higher today as the single currency rebounded from the higher than expected inflation numbers from the US. The jump in the cost of living in the US from dragged the single currency lower, but the move didn’t last long as today has been broadly negative for the greenback.
Commodities
Gold is softer today as the jump in US CPI pushed gold to its lowest level in two weeks. American inflation ticked up to 1.9%, up from 1.7%. The Federal Reserve’s inflation target is 2% and today’s report brings us closer to it. The metal may be weaker today, but the upward trend that it has been in since July is still intact, so we may see buyers enter the fold.
Brent Crude oil and WTI hit two month and five month high’s respectively as demand for the energy is expected to pick up, according to the International Energy Agency (IEA). The timing of the announcement is positive for oil since at the start of the week OPEC stated that output from their group fell in August. Adding to the upward pressure is chatter from Saudi Arabia about potentially extending the production freeze until the end of June 2018.
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