Rather unsurprisingly it is PMI data from the eurozone that has left a dampener on equities in early trade.
A comfortable miss in Germany drags the overall eurozone figure towards the water line. Having managed to grow last month, Europe’s engine room narrowly avoided a return to contraction with a reading bang on the 50 line. It won’t have escaped Eurosceptics that despite sentiment indicators telling us otherwise, the composite figure is at its lowest since mid-2013.
The euro has moved modestly lower than this. So far this week it has failed to make a lasting break through the $1.2575 area on three occasions, and the move back towards $1.25 is somewhat of a foregone conclusion.
On the equities front we have an ugly looking mining sector dragging the FTSE lower. Again this is the cause of a breadline PMI number, with China giving us its manufacturing print courtesy of HSBC.
After what might best be described as a ‘dovish-ish’ Federal Open Market Committee minutes release last night, we may have expected more help for equities today, but hawks are getting a little more help in the UK than they are elsewhere.
After yesterday’s Bank of England takeaway that 7-2 is much closer to 4-5 than it is to 9-0, a blowout retail sales figure for October (0.8% versus 0.3% expected) has given us a platform into the Christmas spending spree, and continued numbers like that would certainly give savers a reason to be shouting for a rate rise.
US markets closed a touch lower last night, but close to session highs in what was a relatively benign session. Today we are calling the Dow Jones to open lower by 50 points at 17,635, in line with European declines.