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Europe in the red as global sentiment slides

European equities are in the red this morning as the sell-off in Asia overnight has shaken sentiment. 

The weaker-than-expected manufacturing numbers from China are putting pressure on mining companies in London. The Chinese manufacturing sector had a reading of 50.3 this month, while economists were anticipating 51.2. Any reading above 50.0 indicates expansion in the sector, so the industry barely grew this month. Mining companies like Rio Tinto, BHP Billiton and Glencore are offside today on account of the Chinese data.  

ITV shares are in the red after the company posted a 5% fall in net advertising revenue (NAV). Falling advertising has been a common theme in the TV sector as streaming services have led to fewer people watching live TV. The company’s Online, Pay & Interactive division revealed a 7% rise in revenue. It is encouraging to see that ITV is adapting to the new way that customers are viewing their content. The stock is down 6.2%, and if the wider negative trend continues it could target 141p.

Taylor Wimpey posted a 10.7% jump in full-year profits before exceptional items, but it swung to a 5.8% fall when you take into account a one-off charge in relation to a leasehold issue. The company aims to increase its total dividend next year by approximately 10%. The house builder has had a strong start to the year, but it is aware of the political uncertainty even though it hasn’t impacted its trading. Despite the solid results, the stock is down 3.2%.

EUR/USD has been hit by the slide in French inflation and the US dollar has extended its gains from yesterday. The French inflation rate fell to 1.4% from 1.5%, while economists were expecting it to remain at 1.5%. Yesterday we saw the German CPI rate fall too, which points to weakening demand in the two largest economies in the eurozone. The CPI rate for the eurozone fell to 1.2%, meeting estimates. This morning the US dollar index eked out a fresh one-month high, as Jerome Powell’s hawkish comments yesterday still resonate with traders. 

At 1.30pm (UK time) the US will announce its preliminary gross domestic product (GDP) reading for the fourth-quarter, and the consensus is for 2.5%, down from 2.6%.

We are expecting the Dow Jones to open up 85 points at 25,495 and we are calling the S&P 500 up 9 points at 2753.

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