This information has been prepared by IG, a trading name of IG Markets Limited. In addition to the disclaimer below, the material on this page does not contain a record of our trading prices, or an offer of, or solicitation for, a transaction in any financial instrument. IG accepts no responsibility for any use that may be made of these comments and for any consequences that result. No representation or warranty is given as to the accuracy or completeness of this information. Consequently any person acting on it does so entirely at their own risk. Any research provided does not have regard to the specific investment objectives, financial situation and needs of any specific person who may receive it. It has not been prepared in accordance with legal requirements designed to promote the independence of investment research and as such is considered to be a marketing communication. Although we are not specifically constrained from dealing ahead of our recommendations we do not seek to take advantage of them before they are provided to our clients. See full non-independent research disclaimer and quarterly summary.
Equity markets are lower after disappointing Chinese imports readings highlighted the economic slowdown in the country. Natural resource stocks were the worst hit by the Chinese trade figures, and as imports have declined for eleven consecutive months it paints a very clear picture that the second largest economy in the world isn’t as hungry for commodities as it once was. It is not just commodity companies that are feeling the effects of the dreadful Chinese data; European car makers and high-end fashion stocks are feeling the pinch as the middle class in China are becoming more prudent.
Bucking the trend is homebuilder Bellway, with the stock up over 3% after registering a record number of sales. These is no stopping the housebuilder as rising house prices and ultra-low interest rates are providing excellent conditions for the company to thrive in. After much ‘will they, won’t they’, it finally looks like a deal has been struck between AB InBev and SABMiller, which has pushed both stocks higher.
Sterling was sent tumbling after the UK revealed that inflation turned negative in September, and already deflation fears are playing in traders’ minds. The Bank of England will be worried that the UK could be in for a prolonged period of negative CPI, while mortgage holders can remain confident their monthly repayments won’t be rising any time soon.
In the US, we are expecting the Dow Jones to open 60 points lower at 17,060. US dealers are worried about China’s economic slowdown, and the devaluation of the yuan will hurt US exports in months to come. Investors are gearing up for the JPMorgan Chase results today, which is the first of the US banks to announce its numbers.