It's been a fairly lacklustre and negative session in Europe today despite a continued improvement in economic data from Europe and the UK.
UK industrial and manufacturing production for June improved by a greater margin than expected, raising expectations that Q2 GDP could well get revised higher, while German factory orders also rose more than expected, largely as a result of aircraft orders from the Paris air show.
Despite the economic backdrop continuing to brighten investors appear reluctant to drive share prices significantly higher, on the basis of uncertainty about the timing or otherwise of continued central bank stimulus measures. It would appear that with markets at these elevated levels investors are taking the opportunity to cash in some chips as the slow holiday season gets underway.
The best performers today have come from a broad cross section of sectors with Holiday Inn owner Intercontinental Hotels pushing back towards three month highs after announcing a special dividend of $350m and announced revenues per room increased.
Also higher as a result of a broker upgrade Intertek broke above its July highs after being upgraded by Royal Bank of Canada.
Asia focussed bank Standard Chartered was also an outperformer after announcing a 4% rise in H1 profits, and increasing its interim dividend.
On the downside gold and silver miners are on the slide after Fresnillo announced a sharp fall in profits due to the recent slide in gold and silver prices. This translated into broader weakness across the sector with Randgold Resources and Vedanta Resources also lower.
US markets opened lower today as the ambivalence of investors translated into a slow drift off the record levels seen only a couple of days ago.
Economic data in the form of the latest June trade balance numbers didn't provide too much of a driver, even though it came in much better than expected narrowing to -$34.2bn suggesting that Q2 GDP may have been stronger than originally thought.
On the company news front the main headline has been around the purchase of the Washington Post by Amazon owner Jeff Bezos.
Retailers are also in focus today after American Eagle Outfitters announced a reduction in its forward outlook after the close last night. This saw shares in fellow retailers Abercrombie and Fitch also fall back in after-hours trading.
After the close this evening we can expect to see the latest numbers from Walt Disney which are expected to rise to $1.05c a share from $1.01c previously.
After the decline of the last few days the New Zealand dollar has bounced back strongly as concerns about the Fonterra whey protein scare start to dissipate. Also doing well in a classic case of "sell the rumour, buy the fact" the Australian dollar is rebounding after the Reserve Bank of Australia cut rates by 25 basis points to a record low of 2.50%, as expected.
is also having a good day after German factory orders rebounded sharply in June, by 3.8%, though on closer inspection a large part of this rise was taken up by aircraft orders from the Paris Air Show.
The pound, on the other hand has struggled to make any meaningful gains despite much better than expected manufacturing and industrial production data for June, as well as better than expected rises in retail sales numbers for July and an improvement in NIESR GDP from 0.6% to 0.7% for the three months to July.
It appears that sterling traders are holding fire ahead of tomorrow's Bank of England inflation report, where it is expected that new Governor Mark Carney will announce some form of forward guidance, linked to the unemployment rate in an attempt to keep UK interest rate expectations anchored at a low level. Any overt dovishness is likely to see the pound sold off heavily.
The Canadian dollar has also slid sharply after a sharp upward revision to the May deficit number to -$C0.78bn from -$C0.30bn.
The US dollar isn't too far behind in terms of performance today, drifting lower despite a softer feel to treasury prices and firmer yields.
Precious metals prices are on the slide today with gold slipping back below the $1,300 level on the back of improving economic data from both sides of the Atlantic.
Crude oil prices are also weaker; falling back for the third day in a row as speculation about a tapering program from the Fed continues to dominate. In any case oil prices at current levels are likely to be difficult to sustain given the tepid economic outlook, and the fact that supplies remain plentiful. We could get further clues as to the Fed's thinking later this evening when Chicago Fed Charles Evans gives a speech on the economy.
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.