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Conflicting growth signals freeze markets

Conflicting indications of growth prospects have investors and traders in a vice. Exacerbated by a US holiday, overnight action across asset classes saw muted moves on lower volumes. European bourses edged lower, and stronger government bond issuers benefited at the expense of weaker nations. The challenge for investors lies in the surge in growth exposed shares, energy products and industrial metals prices since the beginning of the year.

Currency markets remained steady. The Pound rose, then reverted as PM May delivered her Brexit plan B to parliament, with  traders seeming to agree with commentators that it was simply plan A in disguise.

China data came in at forecast lower levels. Fixed asset investment missed slightly, offset by better than expected industrial production. President Xi urged Party leaders to greater efforts to deal with political, ideological, economic, environmental and external risks, and called for political stability. The Yuan slid slightly but the Shanghai composite closed 0.5% higher.

The lack of overnight leads may see local markets drift lower, given the sombre backdrop. Investors could turn to the meeting of global leaders in Davos for guidance, particularly after the IMF downgraded its global growth forecasts. The US reporting season resumes this evening, and insurer Travellers Group and Capital One Financial provide further fuel for financial sector led gains.

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