European markets have struggled to gain traction this morning following on from last night’s weaker performance from US equities.
On the data front UK retail sales for January missed expectations, declining 0.3% on the month, while a 3.4% YoY forecast came in at 1.5%. This in turn has knocked the pound lower as evidence of rising prices starts to impact on consumer spending as we head into 2017, raising concerns that the consumer boom seen in the aftermath of the summer Brexit vote has finally run its course.
Not only was this lower than analyst expectations, this now marks the third month in a row where month-on-month retail sales have been in negative territory, a situation which hasn’t happened in over ten years.
Some light profit taking on banks and miners has also played into the slight softer theme for today, with Standard Chartered (LON:STAN) and Anglo American (LON:AAL) being some of the biggest fallers. Declines in Copper prices are being blamed for the selloff in miners with limited exposure to gold, as the yellow metal continues its march onwards and upwards towards its 3-month highs.
Pharmaceuticals continued to rally this morning following on from Shire’s better than expected results yesterday. The global biotechnology company saw a 78% rise in sales in the year finishing December 2016, and once the costs of the Baxalta acquisition had been stripped out, profits increased 59% to $4.42 bn. The sector has been given a further boost as this morning AstraZeneca revealed positive results from its breast cancer treatment trials that was followed by its top shareholder Woodford Investment Management increasing their stake in the company.
Also up today is Coca-Cola Hellenic Bottling Company as it continues to build on its gains from yesterday’s better than expected results, which has seen its share price hit its highest levels since September 2013.
With no major data out of the US ahead of the long bank holiday Presidents Day weekend and no big earnings reports, the week will be finishing with investors weighing up the likelihood of another Trump twitter rampage or press conference. Whilst these create great headlines for the media it does little to improve stability in the markets, and many will be wondering whether the honeymoon period is over already.
The Dow Jones 30 is expected to open down 64 points at 20,555.
The S&P 500 is expected to open down 7 points at 2340.
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