If the FTSE 100 is going to maintain its ten-year record of rising over the month of December, it is going to do it the hard way: the index is down over 100 points in the first couple of days' trading. The significant economic data due over the next few days has given those with a nervous disposition ample reason to flap, resulting in substantial sell-offs in almost all the major markets worldwide. No doubt Captain Mainwaring would disapprove of all the panic.
Once again the miners are dragging the FTSE lower, although today the retail sector has joined in and added its weight to the top-heavy index. This is certainly a 'risk-off' environment, and the FTSE is falling considerably faster than it did during last week’s meandering drift downward.
The disparity between the UK's economic recovery and that of both Spain and France is becoming increasingly obvious, and fears that France might fall back into recession are resurfacing.
Tesco has recovered slightly from yesterday’s battering instigated by institutional downgrades, but still looks nervous ahead of tomorrow’s third-quarter figures. Rio Tinto has targeted a reduction in its annual expenditure from $14 billion to $8 billion by 2015, and will use those funds to help bring down its debt. They say actions speak louder than words, and when you consider that yesterday the Chinese posted improved manufacturing PMI figures, Rio Tinto's action speaks volumes about how tough it thinks the market will be in the coming years.
The Black Friday/Cyber Monday four-day shopping marathon in the US has shown that, although the number of shoppers has increased from 128 million to 131 million, the average spend has fallen from $423 per person to $407. Retailers appear willing to offer sale prices at an earlier stage in order to maintain their market share.
Although it's late in the year, this week does still offer the Fed the opportunity to reduce its monthly debt-purchasing scheme. Markets have factored in that this will not happen until 2014 at the earliest, but until the week is out we are likely to see them wobbling. With US trade balance, unemployment claims, non-farm payroll figures and unemployment rates still to be announced, there will be plenty of opportunities for traders to jump to conclusions.
The looming resolution to the cane-price dispute that has been going on in India has triggered another sell-off in the London sugar price to three-year lows. This news has been coupled with increasing levels of production from Brazil, up 13% year-on-year.
The raft of economic data set for release later in the week looks to have caused oil traders to rein in their trading, as the bullish run that we have seen over the last month has ceased for the time being.
The Reserve Bank of Australia has kept interest rates unchanged at 2.5%, while at the same time stating that Australian dollar strength was still 'uncomfortably high'. Market reaction has been relatively controlled, but with comments like that we would expect change sooner rather than later in 2014.
The Japanese government will be particularly pleased with USD/JPY performance over the course of November, but will be keeping its fingers crossed that the momentum can be maintained and a break above the summer highs can still be achieved.