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Chinese data slowdown caps market enthusiasm
00:00, 11 March 2013
Europe It's been a tepid start to the week after weekend Chinese economic data came in on the weaker side of expectations, while investors absorb the latest Italian downgrade, as well as a surprise dive in manufacturing and industrial output in the French economy. Combined with other disappointing economic data out of Europe and markets have struggled to make any substantive gains, though the FTSE100 has made fresh five year highs above 6,500, helped by the more defensive sectors of the market, with mobile telecoms leading the way. Vodafone's shares continue to push on after last week's M&A speculation, hitting six month highs after an independent report suggested that the company has the most valuable 3G and 4G spectrum. Also pushing higher Chilean copper miner Antofagasta is also higher ahead of the company's latest full year results tomorrow where we are likely to find out how much the recent declines in copper and gold prices has hurt its profitability. On the downside it is the banks that are having the roughest ride with Barclays and Royal Bank of Scotland the biggest decliners on the back of new calls for banks to boost their capital buffers by the parliamentary commission on banking standards. A report that the European repo market shrank by over 10% last year also reinforced how vulnerable Europe's banks still are and how reliant they remain on ECB funding. US US markets opened lower today in a week that doesn't have that much in the way of event risk with respect to economic data. The first data of note comes on Wednesday with the February retail sales numbers for the month of February, which is expected to show a rebound of 0.5%, up from January's 0.1% rise. Apple shares are likely to remain in focus this week with its big rival Samsung set to unveil the launch of its latest new smart phone on Thursday, the Galaxy S4, as the Korean giant looks to cement its lead in the mobile handset market. Apple shares also appear to be losing favour with some in the analyst community, as more people lose patience after three months of persistent weakness in the stock price. Dick's Sporting Goods is also lower on lower estimates of profits growth, though electrical retailer Best Buy got a boost from a broker upgrade. FX It's been a bit of a mixed bag today on currencies with the pound amongst the worst performers, hitting its lowest levels since July 2010 at 1.4865, as speculation increases that the Bank of England will have its mandate altered to focus more on growth at the expense of inflation at next week's budget statement. This week's trade numbers as well as weak industrial and manufacturing data could well reinforce this expectation. Somewhat perversely the best performers are the Australian dollar despite a weak copper price and weaker than expected Chinese economic data. The single currency is broadly unchanged despite Friday's Fitch downgrade of Italy and more disappointing economic data, this time from France which saw industrial and manufacturing production slip sharply in January by more than 1%. Commodities Crude oil prices continue to remain under pressure, largely on the back of the disappointing Chinese data, as well as the poor French numbers. A slightly stronger US dollar is also weighing on prices. Brent crude prices continue to trade in and around the $110 mark, just above Friday's low at $109.14. Copper prices are also weaker trading near three month lows on the back of the weaker China data. 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.