It’s been a bit of a mixed week for global stock markets on the whole as early optimism has waned somewhat and whilst UK and European benchmarks are still on track to post gains since Monday they have pulled back in recent trade. The FTSE is lower by around 60 points on the day with soft economic figures from China overnight and Europe this morning weighing on sentiment. It’s been a heavy news week as far as Brexit is concerned and these developments remain the primary driver of the pound in the near term. Looking at recent sessions though it is worth noting that while the pound has declined against all of its peers since Monday, the declines are fairly measured with the only G10 currency gaining over 1% against it in that time the US dollar - and this is due in no small part to a persistently strong buck.
Disappointing releases from China and Europe
Overnight we got the latest economic data from the far east with further signs suggesting that China’s economy is slowing faster than economists expect and being clearly hampered by its trade conflict with the US. Industrial production for November came in below forecasts while the pace of consumer spending, as shown by retail sales, dropped to its lowest level in more than 15 years. On the trade front there does seem to be the chance of better things ahead with more reports suggesting this morning that China will lift their retaliatory tariffs on US cars from 1st January. This is a positive development development no doubt, but while the US-China trade tensions are thawing slightly, they still remain frosty and are in danger of freezing back over all together at a moments notice.
Closer to home business surveys across Europe have come in worse than expected with the French number particularly bad. The PMI index for France contracted for the first time in 2 ½ years and it is not hard to see that the ongoing “gilet jaune” protests are having a clear negative impact on economic activity. This is not the sole factor weighing on business though with the same metric for Germany also coming in below forecasts and as we draw in to year end the economic performance of Europe in 2018 remains one of real disappointment against an optimistic backdrop following a stellar 2017.
Miners drop as TUI hands back recent gains
The worse than expected Chinese data is having a clear adverse impact on mining stocks with Glencore (LON:GLEN) and Anglo American (LON:AAL) both falling lower and dragging on the FTSE. After ending yesterday as the best performing blue-chip in London, TUI today finds itself at the bottom of the FTSE 100 index with shares in the travel operator erasing all of the gains. The firm reported double-digit sales growth for the full year with a strong performance in particular in their hotels and cruise trips but after rising 5% Thursday, the share price has declined by 4% today to trade back near where it was before the earnings update.