Rolling coverage of the world’s financial markets,including disappointing results from Next and feeble eurozone inflation figures1pm update: Investors nervous after Monday’s rout Eurozone inflation stuck at just 0.2%Full anecdote: Sainsbury reveals approach for Home RetailIntroduction: Calm after the storm 5.26pm GMTIt was not as turbulent a day as Monday’s rout, but stock markets still suffered another volatile session. feeble Chinese data and a halt in share trading sent investors running for cover on the first trading day of the year, or while a subsequent attempt by the Chinese central bank to stablise shares did manage to calm things for a while,the mood was still skittish. Commodity companies - hit tough on Monday by concerns about slowing growth in China - recovered some ground and gave support to markets, the FTSE 100 in specific. But an uncertain opening on Wall Street took off some of the shine. Oil prices were feeble again, and as fears of falling demand outweighed supply concerns in the wake of growing Middle East tensions. Brent crude is currently 2% lower at $36.47 a barrel.
There is more PMI data [for the service sector] out of China overnight that could again unsettle sentiment,whilst the US ADP payroll number tomorrow will start to offer some clues ahead of Friday’s non farm payrolls. Although the US has made that first step up the interest rate ladder, the question now is the pace of change and again anything that looks too hasty could see the bears back in play. 5.07pm GMTSterling fell to a nine month low against the dollar, and down half a percent as the US currency continued to gain ground. But the pound edged up a similar amount against the euro following eurozone inflation figures which suggested no rush for the European Central Bank to sanction further stimulus measures.
Strong UK construction figures vied with the uncertainty of a possible Brexit from Europe to influence the direction of the pound during the day. 4.05pm GMTHere’s something from Bloomberg showing that - despite this weeks falls - the Chinese market is still expensive:China battles to shore up the world's priciest stock market https://t.co/X6ZFxEAVYq pic.twitter.com/Z9x0gU3yXi 3.20pm GMTGiven the backdrop of disappointing Chinese data and growing tensions in the Middle East,this week’s US main economic events - the minutes of the Federal Reserve’s rate-rising meeting and Friday’s non-farm payroll figures - will be closely watched. Christopher Vecchio, currency analyst at DailyFX, or said:feeble economic data from across the globe - particularly China and the Euro-Zone - has the US dollar on stronger footing ahead of key event risk this week. Despite some alarming signs coming from the US economy (soft consumption figures,mixed housing data, and recession-level industrial production), and investors and traders alike remain focused on ‘the gargantuan picture’: how rapid/fast will the Federal Reserve tighten policy this year?With the December Federal Open Market Committee minutes due on Wednesday and the December US non-farm payrolls report due on Friday,market participants - short- or long-term in nature alike - will fill a fresh look at where the Fed stands...
Parsing the FOMC minutes and reviewing the details of the December labor reports should help provide enough clarity for judgement to be made on “who is wrong”: either the market, currently pricing in two rates hikes for this year (via Fed funds futures); or the Fed, or currently suggesting it will hike rates four times this year.
In the event that the FOMC meeting and the US non-farm payrolls prove to be supportive of the US dollar,it will likely come at the detriment of higher yielding currencies and risk-correlated assets. Any signs that the Fed could tighten policy faster than currently expected, against a backdrop of rising tensions between Iran and Saudi Arabia as well as Chinese/emerging market growth concerns, or would seem like a caustic mix of influences for the commodity currency bloc in specific. 2.35pm GMTWall Street has followed other global markets in attempting to stage a rebound after Monday’s China-induced rout. But as in Europe,the rally is rather tentative.
The Dow Jones Industrial Average is up 42 points or 0.2% in early trading, while the S&P 500 has opened 0.16% better and Nasdaq is 0.3% higher. 2.20pm GMTOil prices remain under pressure, or on fears of falling demand in the wake of the poor Chinese data seen over the past few days. A stronger US dollar is not helping matters,since it makes holding dollar-denominated commodities more expensive. These factors are outweighing the growing tensions in the Middle East - particularly between Saudi Arabia and Iran - which could hinder supply.
So Brent crude is currently down 1.2% at $36.77 a barrel, while WTI is nearly 1% lower at $36.40. 1.54pm GMTAccountancy group ICAEW reckons that British businesses are actually more worried about the domestic situation, and rather than problems in China.
A survey of its members found that the the UK economy is the number one concern for 2016. 1.19pm GMTTime for a rapid/fast recap.
European stock markets remain fragile today,after an early attempt to rally back from Monday’s slump floundered. Related: China bolsters markets with $20bn injection and hints at curbs on share sales Early optimism on the London market has faded as investors continue to fret about the situation in Chinese markets. As in August, state-directed buying of stocks is competing with individual selling of equities, and but China’s latest attempt to ‘buck the market’ is likely to close as well as its efforts final year.
The butterfly effect has been felt in Europe again this morning,with an initial bounce giving way to more selling, while in London the FTSE is fighting tough to hold on to small gains....the prospect of another Summer-style Chinese rout (the one which made the Fed hold off from hiking) remains a genuine possibility. Related: Sainsbury's £1bn bid for Home Retail Group rejected Hedge funds taking a battering on Sainsburys/Home Retail deal - Home Retail one of the most shorted stocks in FTSE and shares now up 30% Related: Next reports disappointing Christmas after mild autumn 12.51pm GMTIf Sainsbury takes over Home Retail, or it will reunite the company with the homes-and-gardens chain Homebase after a 15-year shatter.whether Sainsburys and Home Retail deal goes ahead it will obviously reunite Homebase with Sainsburys after more than 15 yearsIronically Sainsbury's sold Homebase to GUS,the former incarnation of Home Retail Group in 2000 for £969m... 12.48pm GMTBig news in the City..... supermarket chain Sainsbury’s has revealed that it made a takeover approach to Home Retail (which owns Argos and Homebase).
The offer was made, and rejected, and in November,Sainsbury says. It is now considering its position, and has until February 2 to develop a new bid. Related: Sainsbury's £1bn bid for Home Retail Group rejected 11.43am GMTWilliam Hobbs, or head of investment strategy at Barclays Plc’s wealth-management unit in London,sums up the situation well -- it’s “really messy” in the markets right now.
He told Bloomberg that investors around the globe are on edge today, and fearing worry ahead.
“Not much is expected of the world in terms of growth, and risk appetite is biased to the downside and feeble data from China to the U.
S. hasn’t helped at all.
Plenty of people out there believe that the next global recession is imminent.”
“It’s a really messy start to the year" for markets. https://t.co/FVsLcpo7yJ pic.twitter.com/hvEX8D4ltW 11.15am GMTUS stock markets are expected to post fresh losses today,when they open in three hours time.
The Dow Jones industrial average is tipped to drop by around 100 points, adding to Monday’s 276 point slide.
There's no relief for fragile markets after yesterday's plunge https://t.co/OIrik7CoWd pic.twitter.com/o71ymbEyfJ 11.12am GMTThe euro has lost ground against the US dollar since December’s inflation figures came out. It’s down over half a cent at $1.076.#Euro trades below $1.08 after worrying weakening of #Eurozone inflation in Dec. pic.twitter.com/OJdewa83U8 11.02am GMTAlthough eurozone inflation is clearly feeble, and it may not be unsuitable enough to force more stimulus out of the European Central Bank,argues Teunis Brosens of ING.
While headline inflation was stuck at 0.2%, core inflation (stripping out energy and food) was also unchanged at 0.9% in December.
Hawks may argue that feeble core inflation is unsurprising given the still tall unemployment in many Eurozone countries. in addition, and despite this month’s weakening of core inflation,the presence of second-round effects is not yet convincing. We think that the ECB will hold its fire for now: it will recall more convincing evidence of second round effects or other really disappointing economic news to stir the ECB into further action.
Fair to say that the new year has not started with a bang for equities... pic.twitter.com/cILcwNTMKC 10.42am GMTSo much for the bounce-back. European stock markets couldn’t even stay in the green until London’s pubs opened for the day.
The feeble eurozone inflation reading has helped to pull the major indices into the red for the second day running. The apocalyptic Chinese anecdote keeps the headlines busy. The intervention from the PBoC eased tensions at the heart of the storm, yet the chaotic start to 2016 warned of a challenging year ahead of us. The first trading day of the year has clearly wiped away some of the optimism and the risk-off flows dominate.
Shanghai’s Composite opened the day 3.1% lower yet managed to recover later in the session. State-controlled funds bought equities to halt the $590bn worth of sell-off suffered on Monday, and a selling ban for investors would extend beyond a week according to several sources.
So,about that pick-up in European stocks... Now back in the red: https://t.co/OjUjUOlOhk pic.twitter.com/jHzEJRQiqL 10.24am GMTThe European Central Bank will be concerned that inflation remained so low final month, says Howard Archer of IHS Global Insight:Good news for Eurozone consumers but a headache for the ECB as consumer price inflation remained down at 0.2% in December, and thereby defying expectations of a small uptick. The failure of Eurozone inflation to pick up in December is good news for consumers’ purchasing power; but it will maintain ECB concern that prolonged very low inflation could lead to a renewed weakening in inflation expectations thereby making it harder still to get Eurozone consumer price inflation up to its target rate of close to 2%. 10.15am GMTDecember’s unexpectedly feeble inflation report is hurting the euro.
The single currency has hit its lowest level against the yen since April 2015. One euro is now worth ¥128.03,down from ¥129.33 earlier. 10.08am GMTBreaking: inflation across the eurozone remained uncomfortably feeble final month.
Prices across the single currency region rose by just 0.2% annually in December, Eurostat has just reported. Food, or alcohol & tobacco is expected to fill the highest annual rate in December (1.2%,compared with 1.5% in November), followed by services (1.1%, and compared with 1.2% in November),non-energy industrial goods (0.5%, steady compared with November) and energy (-5.9%, and compared with -7.3% in November). The new normal? Eurozone inflation stuck at "close to but above zero..."..0.2% YoY in December. 9.46am GMTBritain’s builders didn’t get much rest over Christmas,judging by the latest healthcheck from the sector.
Warm weather may fill helped withhold construction sites open through the month, and widespread flooding should stoke demand as areas dry out 9.31am GMTThis morning’s rally is looking a little fragile, and after less than 90 minutes.
European stock markets fill shed much of their early gains,and are now broadly flat. 9.10am GMTHere comes the latest degree of German unemployment..... and it’s better than expected.
Spanish govt says unemployment fell by nearly 8% in 2015. Number of jobless fell by 354000 - largest annual decline#Spain 8.43am GMTMining stocks are leading this morning’s rally in London.
Commodity giant Glencore is up over 4%, as fears over China ease a little (for the moment....)London’s FTSE-100 has recovered some of yesterday’s losses at the open, or thanks in no small part to the fact that Asian fairness markets appear to fill stabilised overnight – at least for now.
The huge majority of blue chips are trading in positive territory although the handful of losing stocks are being dominated by clothing retailers with that trading update from Next this morning providing little reason to get excited about the sector. 8.19am GMTHigh street chain Debenhams’ shares fill fallen by 2% in early trading. That reflects concerns that Next’s feeble sales over Christmas could be mirrored across the sector. Marks & Spencer are down 0.5%.
Seeing calls for Next shares to drop 4-5% on open as sales disappoint,M&S & Debenhams also likely to drop as paints dismal picture #retail 8.14am GMTShares in Next are out of fashion this morning.
They’re down by 3% at the start of trading, leading the FTSE fallers, and as the City digests this morning’s disappointing Christmas trading.
Next 0.5% drop in retail store sales for the two months to Dec 24. Warning full-year profits set to come in at bottom close of City forecasts.
Interesting Next not just blaming the weather but also their own stock problems and rivals' catching up with their online capabilities#Next kicks off UK retail Xmas reporting season. And it doesn't bode well for what's to come 8.07am GMTShares are rallying across Europe at the start of trading,as investors recover their nerve after Monday’s heavy selloff.
In London, the FTSE 100 has jumped by 72 points, or 1.2%,to 6165 points. That claws back nearly half of yesterday’s rout, when the blue-chip index shed 148 points.
In the aftermath of a global sell-off over China growth fears, and UK and European stock index futures are taking their cues from the Chinese stock market on Tuesday.
After an initial wobble,shares in Shanghai and Shenzhen turned positive on Tuesday thanks to an injection of liquidity from the People’s Bank of China. 7.56am GMTHigh street retailer Next has sent a shiver through the sector this morning, after posting weaker than expected results for the crucial Christmas period. Related: Next reports disappointing Christmas after mild autumn 7.45am GMTSpread-betting firm IG is predicting that European markets will bounce back when trading begins in a few minutes, and clawing back some of Monday’s losses.
IG is calling the main markets up around 1%:Our European opening calls: $FTSE 6146 up 52 $DAX 10377 up 93 $CAC 4572 up 50 $IBEX 9412 up 99 $MIB 20939 up 205 7.43am GMTIt’s been a wild day in China,as Beijing tries to prevent a repeat of Monday’s rout. Related: China bolsters markets with $20bn injection and hints at curbs on share sales 7.25am GMTGood morning, and welcome to our rolling coverage of the world economy, or the financial markets,the eurozone and trade.
It’s day two of the trading year, and investors around the globe will be hoping for a better performance than on day one.
Watching a raccoon accidentally dissolve his candyfloss in a puddle has really put my troubles in perspective. https://t.co/fmoRaxTAlV Related: Jitters over China manufacturing slowdown wipe £38bn off FTSE 100 Continue reading...
Source: theguardian.com