Europe Despite better than expected French and German manufacturing and services PMI’s equity markets across Europe appear to be suffering from a bit of a Chinese hangover, falling back slowly in the morning session, before accelerating into the afternoon session to post their lowest levels in over a week. There is also the fact that the improvement in the German data with manufacturing hitting 32 month highs makes it much less likely that we will see the ECB ease policy further any time soon, which when combined with the likelihood of a possible taper next week from the Fed is helping fuel a bout of profit taking. The big movers today have been publishing house Pearson, hitting six month lows after the company issued a profits warning. The company’s education business in the US appears to have been hit as a result of cutbacks in government spending and sequester cuts. Also lower today we’ve seen Easyjet’s shares hit a bit of turbulence after the airline warned that its first half results would show a loss of between £70m-£90m. On the plus side the company moved more passengers and increased its revenues but given that the shares have doubled in the last 12 months some profit taking shouldn’t be unexpected. Royal Mail’s share price is also taking a bit of a pounding ahead of tomorrow’s post-Christmas trading update as investors take profits on concerns that the numbers might not live up to expectations.. On the plus side both Royal Bank of Scotland and Barclays are enjoying a bit of a rebound after several days of selling. Marks and Spencer also appears to have discovered a bit of its magic and sparkle after an upgrade to outperform from Exane. US US markets opened lower today taking their cues from Europe’s weakness Weekly jobless claims came in at 326k a slight increase on last week’s 325k IBM shares will once again be in the spotlight after the company agreed to sell its server unit to Chinese PC maker Lenovo for $2.3bn. Fast food retailer McDonalds cited a challenging year as the company reported earnings slightly above analyst expectations but slower sales in their more established markets fell back, despite a rise on total revenues to $7bn. One of last year’s outperformers Netflix looks set to continue its good run after reporting that it had added 1.74m subscribers outside the US. Over the past 12 months the stock has risen over 240% and could well be in line for further gains. The latest earnings from Starbucks and Microsoft are also expected after the closing bell, with particular focus on Microsoft to see if it won the battle of the games consoles over the Christmas period with Sony. How many Xbox One’s did it manage to shift? FX Today’s disappointing Chinese data has weighed on the commodity pairs of the Canadian and Australian dollar, both falling sharply, though the Canadian dollar’s slide has more to do with comments yesterday by Bank of Canada governor Stephen Poloz who stated that a strong currency was hurting exporters. The pound has also continued its rise, hitting its highest levels since August 2011, above 1.6600, as markets price in an earlier rise in interest rates. The euro has also found itself fairly well underpinned after Eonia rates dropped back 11 basis points and the latest German and French manufacturing and services PMI’s showed an improvement, with the German measure hitting a 32 month high. The best performer has been the Swiss franc after the Swiss government raised the level of capital banks needed to hold against their mortgage books, in an attempt to cool down the mortgage market. Commodities Copper took a bit of a nosedive on those Chinese manufacturing numbers hitting their lowest levels in a week given that the HSBC numbers are considered a more accurate measure of Chinese demand than the official numbers. The slowdown in exports and new orders was also a key area of concern. Gold and silver prices have started to edge higher on the back of a weaker US dollar with Chinese demand for gold starting to underpin the price ahead of next week’s Chinese New Year, while a call to review Indian import restrictions also helped underpin sentiment, sending gold to its highest level this year. CMC Markets is an execution only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.


Disclaimer: CMC Markets is an execution-only service provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although we are not specifically prevented from dealing before providing this material, we do not seek to take advantage of the material prior to its dissemination.