It would appear that comments from the Chinese finance minister that the world's second biggest economy could well miss its growth target for this year have taken some of the edge off the exuberance of the last two days though core European equity markets
continue to remain underpinned on the prospects for continued central bank support from the Federal Reserve.
Southern Europe has been another story entirely with Portuguese markets getting hit on political uncertainty there, and the Spanish IBEX being hit by talk of a new energy bill which will raise prices to consumers as a part of electricity sector reform with the government slashing subsidies on renewables.
Not unexpectedly the mining sector has proved to be a drag on the back of those China comments, but a pullback is not altogether surprising given the big gains from the sector seen yesterday. Investors need to be wary though because growth at current estimates is expected to come in at 7.5% a twenty three year low. If we drop below that, which is what Chinese officials are hinting at, then China could well be a bigger drag on global growth then markets have priced in.
The biggest fallers in the mining sector thus far are Fresnillo, Anglo American and Antofagasta as copper and silver prices fall back sharply.
Serco and G4S have also continued their declines from yesterday, while Reckitt Benckiser is also sliding after having one of its products removed from an approved medications list by the US's CVS Caremark consumer staples group.
The best performers have been financials with asset managers doing particularly well, Aberdeen Asset Management higher after an upgrade from UBS, while Resolution is also higher after an upgrade from Nomura.
Also higher, Royal Bank of Scotland is continuing its recent recovery after its recent falls in the last month or so.
US markets opened broadly flat after a series of positive earnings reports from some of the US's biggest banks.
JP Morgan was the first to report, putting its London Whale problems behind by reporting Q2 earnings way ahead of expectations of $1.38c a share, coming in at $1.60c a share, while revenues also beat expectations by over a $1bn.
Wells Fargo, one of the US biggest mortgage lenders, also joined the party with higher revenues and $0.98c, above consensus of $0.93c; however falling mortgage applications are a concern for both banks.
On the flip side parcels company UPS came in below market expectations, and issued a profits warning in the process citing overcapacity in global air freight market and a slowing US economy, begging the question as to which companies are a better barometer of the US economy, banks with their opaque balance sheets, or companies that actually move stuff around the country. Fedex shares also fell back in sympathy.
As far as economic data is concerned the latest PPI data showed that fears about deflation are considerably overblown, coming in at 0.8% in June, above expectations of 0.5%, with raw materials rising 11% year on year.
University of Michigan consumer sentiment data came in slightly below expectations at 83.9, below expectations of 84.7.
The US dollar has bounced back quite strongly today after yesterday's sell off, with the Australian dollar in particular getting heavily pummelled to three year lows, as markets increase their bets on a rate cut at the next Australian central bank meeting. Next week's RBA minutes should add some colour to that debate given RBA governor's unfortunate comments about bank deliberations earlier this month.
has also struggled to maintain its recent gains as political turmoil in Portugal keeps the single currency on the back foot. Comments from ECB member Coeure that forward guidance would be reviewed on a monthly basis invited ridicule given that it can hardly be considered forward guidance then.
The pound also slid back after figures showed construction output slid 3.4% on the year, much worse than expected.
Copper prices have fallen back from yesterday's rises after the reported comments from the Chinese finance minister, as have silver prices.
Oil prices have remained underpinned on inventory concerns, but the upside has been tempered by concerns about the comments out of China this morning.
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