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Stocks softer as Chinese data cools

Stock markets in Europe are slightly in the red today as the bullish momentum we witnessed at the start of the week has waned, and softer than expected economic data from China overnight has added to the negative move.

The cooling in the growth rate of Chinese industrial production, retail sales and fixed asset investment has given traders cause for concern.

Anglo American, Glencore, Rio Tinto and BHP Billiton are lower on the day due to the Chinese numbers failing to meet expectations, and growing at a slower pace.  

Shares in Next have surged 12% this morning after the retailer upgraded its full-year revenue and profit guidance. The company has had a tough time over the past 18 months as weak consumer demand and a soft pound hit the company hard. First-half profits fell by 9.5%, but the important thing is that ‘prospects seem less challenging’. The share price filled the gap at 4756p (which was created on 3rd of January) and that is encouraging to see, if the bullish sentiment continues it my return to the November high of 5218p.  

The GBP/USD is lower today as traders await the BoE meeting at 12pm. The consensus is for monetary policy to remain on hold, but traders will be keeping an eye out for the voting breakdown. If two of the nine members vote for a hike, the markets wouldn’t be shocked, but some traders suspect Andy Haldane might join Michael Saunders and Ian McCafferty and vote for a hike. Should Mr Haldane join the hawks, sterling could be propelled higher.

We are expecting the Dow Jones to open 15 points lower at 22,143, and we are calling the S&P 500 down 3 points at 2495.

At 1.30pm, the US will announce the latest inflation figures, and economists are expecting a reading of 0.3% and 1.8%, on a monthly and yearly basis respectively. Traders aren’t pricing in another rate hike from the Federal Reserve this year, and while inflation remains below the Fed’s 2% target, dealers are unlikely to change their outlook.

At the same time, the US will also report the initial jobless claims figures. The consensus is for a reading of 300,000, and that compares with last week’s reading of 298,000.


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