European stock markets are subdued today in the wake of the underwhelming growth figures from China overnight. 

Europe

In 2018, the Chinese economy grew by 6.6% - its slowest rate since 1990. The update hammered home the notion that the second-largest economy in the world is cooling. Some of the gains that were racked up on Friday, have been handed back. Some traders now feel that China’s offer to eliminate the trade gap with the US is unrealistic, and there is a little less optimism in relation to the US-China trade prospects. The IMF trimmed its global growth outlook. The organisation expects 3.5% growth in 2019, and 3.6% growth in 2020 .The previous forecast was for 3.7% in both years. The IMF warned the weakness in the German auto sector due to new emission regulations, and a dip in Italian demand has led to a loss in economic momentum. Volatility across the board is low as the US is on holiday for Martin Luther King Jr Day.

The downbeat growth update from China has put pressure on mining stocks like Glencore, Rio Tinto and BHP Billiton.

Just Eat shares are in the red after the CEO unexpectedly stepped down. Peter Plumb was in the role since July 2017 and today he announced his departure. Last year saw ‘strong growth for the group’ and Mr Plumb helped put the firm ‘on a new course’. The company now expects full-year revenue to be £780 million, and earnings to be between £172 million and £174 million. In a previous update, the company had predicted revenue of between £1 billion and £1.1 billion, and the earnings forecast was between £185 million and £205 million. The lowering of the outlook has dampened sentiment, and the lack of leadership has added to the downbeat mood too.

William Hill shares are in the red after the company said it expects full-year adjusted operating profit to fall by 15%. The group cited tighter laws around gaming and a fall in high street activity for the performance. On the bright side, the group registered ‘excellent growth’ in the US .The expansion in the US is a reaction to the tighter regulation in the UK. The firm is expanding in Sweden too as a way of diversifying its portfolio. The stock has been in decline since August, and if the bearish move continues it might retest the 150p area.

Meggitt confirmed it had signed a $750 million contract with Pratt & Whitney, and the agreement will last for 10 years.

US

Equity markets are closed today as the US celebrates Martin Luther King Jr Day.

FX

GBP/USD will be in focus as Prime Minister May is expected to announce her ‘Plan B’ later today. Last week Mrs May’s draft agreement was overwhelmingly voted down, and seeing as there is speculation that today’s new improved proposal won’t be much different from the last one. There is talk the Prime Minister is looking to ditch the Irish backstop, but getting the EU to agree to it is a different story. The clock is ticking, and as it stands the UK is set to leave the EU without a deal, but the pound is holding up well considering the potential political risks.

EUR/USD is largely unchanged due to the lack of volatility in the markets. It was been a quiet day in terms of economic updates. German PPI for December dropped by 0.4% on a monthly basis, while economists were expecting -0.2%, and keep in mind, the November reading was 0.1%. The fall in PPI could point to softer demand, and might lead to weaker CPI in the near-term.

Commodities

Gold has edged lower again as trader’s bank their profits from last week’s positive run. The commodity has been in an upward trend since mid-November, and if the positive move continues it might target $1,300 – an area it has recently struggled to top.

Oil has experienced low volatility today. The energy lost ground overnight due to the weak China GDP report, and it raised concerns about global growth. The oil market managed to recoup the losses, but the concerns persist.

 

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