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Sterling boosted by solid growth numbers

Weakness in the mining sector has pushed the FTSE 100 into the red, and the spike in sterling due to the good UK GDP numbers accelerated the negative move.

Continental Europe is seeing mixed trading across its major indices. Trading ranges remain tight in Europe as investors are keeping an eye on the European Central Bank meeting tomorrow, not the mention the Spanish Senate will be voting on the Catalan direct rule question.

Lloyds shares are down 1.8% despite the bank posting a 38% rise in underlying profits for the last nine months. The bank didn’t set aside another further provisions for the mis-selling of payment protection insurance (PPI) in the third quarter, which is a welcome change. The common equity tier 1 ratio is solid, and this is something that investors can feel more comfortable about, as it tells us the bank is well capitalised.

Jo Jenkins, the head of clothing at Marks & Spencer’s has resigned, and the share price is down 0.9% on the back of it. The clothing division has usually lagged behind the food department at the retailer, and the departure of Ms Jenkins after of the busy Christmas period does not boost investor confidence.

GBP/USD spiked after the latest UK GDP numbers showed a growth rate of 0.4% and 1.5% on a quarterly and yearly basis respectively. Both numbers topped economists’ expectations. The pound has been under pressure this week after Sir John Cunliffe of the Bank of England (BoE) hinted that a rate next month is not a done deal, but today’s growth figures has spurred hawkish sentiment.

EUR/USD is a slightly higher this morning and it was helped along by the German Ifo business climate report which came in at 116.7, up from 115.2 in September.

We are expecting the Dow Jones to open 4 points higher at 23,445, and we are calling the S&P 500 down 3 points at 2566.

1.30pm (UK time), the US will release the durable goods report for September, and economists are expecting a rise of 1%, and that compares with a 1.7% rise in August.

At 3pm (UK) the Bank of Canada will announce their interest rate decision, and the consensus is to keep rates on hold at 1%. A press conference follows at 4.15pm (UK time).

Boeing, Coca-Cola, Freeport-McMoRan and Visa will announce their quarterly figures later today.


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