• Weak response in Asia to China rate cut • German IFO beats expectations • WPP bottom of the FTSE 100 • US stocks to open lower Asian shares climbed only slightly on Monday in the aftermath of China’s surprise rate cut. Chinese Premier Li Keqiang took the sting out of the tail of rate cut by saying China won’t defend to the death its 7% growth target. “Operating within a reasonable range” of growth as opposed to defending 7% would imply a willingness to allow growth to slip to perhaps as low as 6%, which would require less stimulus. China’s rate cut has become sweet and sour; stimulus is sweet but the low growth that has worried the government enough to stimulate is sour. The lacklustre response in Asian markets to the China rate cut has weighed on European shares which opened in negative territory. After massive gains in the last two days of the week and uncertainty surrounding the Fed rate decision on Wednesday, markets are having a natural pullback. The FTSE 100 and French CAC were both lower in early trading whilst the German DAX was mostly unchanged. A smaller than expected dip in German business confidence bolstered sentiment a little on the country’s benchmark stock index. However, with the ECB “re-evaluating” Europe’s economy at the December meeting, from a market’s perspective, it may be back to ‘bad data is good’ to justify increasing stimulus. Exporters listed on the DAX stand to benefit the most from a combination of a lower European exchange rate and higher demand that could result from China’s rate cut. The FTSE 100 came off its two-month high on Monday with WPP propping up the index after a poorly received earnings update. Telecoms companies ITV and Sky shares were weighed down by another drop in Talktalk shares as hackers threatened another cyber-attack. Talk of a possible sale at Aberdeen Asset Management buoyed shares to the top of the FTSE, though gains were capped by a rebuttal from the company that a sale was a consideration. US stocks look set for a weaker open on Monday, taking a breather ahead of earnings from Apple and the beginning of the Federal Reserve meeting on Tuesday. Technology stocks took off last week with one of the most surprising moves being the 10% jump in Microsoft shares. It was the kind of move typically associated more with a growth stock like Netflix than a blue-chip staple of the Dow Jones Industrial Average. USA pre-opening levels S&P 500: 7 points lower at 2,068 Dow Jones: 48 points lower at 17,598 Nasdaq 100: 13 point lower at 4,611 CMC Markets is an execution only 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.