London follows Asia into the red

In mid-morning trading the FTSE 100 is offside as mining firms lead the market lower.

Source: Bloomberg
  • Lacklustre Asia fails to inspire London
  • West at risk of being slowed down by Far East
  • UK and US central bankers’ speeches in focus

Equity markets are drifting lower this morning as a sideways session overnight in Asia didn’t inspire any buying. There has been little to go on in terms of big macro stories and dealers are letting the Chinese growth figures sink in, meanwhile the outlook for the Far East isn’t great at the moment.

The glory days are over for the BRIC economies and their slowdown will be felt in the West as traders are reluctant to buy European stocks while the global economy is expanding at a slower rate. In the wake of the selloff since summer, investors constantly need a reason to buy into the market and for the time being there are few convincing enough.

Updates from Ian McCafferty and Mark Carney this morning will be the highlight of the London session. Mr McCafferty is expected to keep his hawkish line, while Mr Carney is anticipated to discuss the implications of the UK potentially leaving the EU. The BoE likes to warn the UK from time to time that interest rates will rise, but with inflation being driven negative due to weak commodity prices, its inaction will speak louder than words.

UK mortgage holders will have nothing to fear for the foreseeable future, as it will be events outside of the UK that will send inflation heading towards the BoE’s target.

In the US, we are expecting the Dow Jones to open 80 points lower, at 17,150. The US futures markets have followed their European equivalents lower. 

The reporting season in the US has got off to a poor start, and to make matters worse the strong economic data adds weight to the argument that the Fed will hike rates this year.

Speeches from three members of the Federal Reserve, including Janet Yellen, will be in focus today and hawkish commentary will keep stocks under pressure. 

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