Mining companies are in demand this morning on the back of the Chinese trade data.
In September, Chinese imports grew by 18.7%, which was a nice increase on August’s growth rate of 13.3%. The consensus was for an increase of 14.7%, so that was easily exceeded. The country is an enormous importer of minerals so stocks like Rio Tinto, Anglo American and Glencore are higher on the day.
Shares in GKN are down 6.4% after the company announced that two ‘significant external claims’ are likely to cost the company around £40 million. The company declined to give further details because the information is sensitive. GKN also revealed a £15 million write-down in relation to its North American Aerospace business. The company had a ‘disappointing’ third-quarter as operational challenges and pricing pressure is impacting the business. Despite the write-down and the two probable charges the company expects full-year profits to be only just ahead of last year’s figure. When you take into account the company had a pre-tax profit in excess of £1.1 billion last year, these one-off costs are relatively small, but whenever investors hear profit warning, they run for the hills. The stock gapped lower, and if it falls below the August low of 313p, it could target 295p.
EUR/USD is largely unchanged as German inflation held steady at 1.8%, in-line with economists’ expectations. Italy’s inflation rate slipped back to 1.1% from 1.2%, also meeting expectations.
GBP/USD has more than made for the losses it endured yesterday after the EU is preparing for a post-Brexit trade discussions. The deadlock between the two sides still persists, but if the EU are getting their house in order it is an optimistic sign.
We are expecting the Dow Jones to open 10 points higher at 22,851, and we are calling the S&P 500 flat at 2550.
At 1.30pm the US will announce the latest CPI and retail sales figures. On a yearly basis, CPI is ticked up to 2.3% from 1.9% and the core CPI is anticipated to rise to 1.8% from 1.7%. On a month-on-month basis retail sales is tipped to be 1.7% and the core retail sales figure is expected to be 0.3%.
Bank of America and Wells Fargo will announce their third-quarter figures today.
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