European shares were lower on Thursday morning as a dip in the oil price and soft earnings from Burberry pulled the FTSE 100 off its 2016 high ahead of the Bank of England policy meeting.

Markets are taking a breather after UK and global stocks were catapulted into the black for 2016 yesterday on the back of data showing a surge in Chinese exports last month. Crude oil prices are struggling with the 200-day moving average after prospects of an output freeze were reduced by comments from Russian and Saudi oil ministers.

Shares of Burberry dropped 7% after sales dropped in the six month through March and the luxury retailer warned of a “challenging” demand environment.

The luxury sector is going through a bit of an inflexion point. There are signs China’s economy is turning a corner but the anti-corruption drive is still in full swing and that is damaging for global luxury demand. Still, there are signs of specific weakness within Burberry since Luxury retailer LVMH reported rising sales in the first quarter, although fashion sales were flat. Maybe it was lucky timing or maybe the company is missing some of her magic, but Angela Ahrendts seems to have walked away at not far off peak-Burberry.

Shares of ITV saw modest gains while Entertainment One, owners of Peppa Pig, leaped 12% on rumours of a possible deal, though Entertainment One has denied receiving any approach. The rumour is entirely believable since ITV has been building up its studios division with acquisitions. ITV may well be mulling an offer but Entertainment One’s denial suggests that for now, it is just a rumour.

US stocks look set for a lower open in line with a pullback in global equities and oil ahead of more big bank results from Wells Fargo and Bank of America after both just failed “living will” tests by US regulators.


USA pre-opening levels

S&P 500: 6 points lower at 2,076

Dow Jones: 35 points lower at 17,873

Nasdaq 100: 12 points lower at 4,542


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