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.
Last night’s Chinese selloff has once again seen the Asian powerhouse move back into bear market territory for the second time in just over six months. This overnight performance has been enough to trigger a selloff in across the board in Europe. The top five fallers in the FTSE 100 are all miners – a template we have seen all too frequently over the previous twelve months.
The last couple of days might have seen the FTSE flirting with the idea of breaking back above 6000, but this morning’s actions look to have cooled any hopes of that. Brent crude has once again dipped below $30, regardless of rumours that an emergency OPEC meeting might be convened. At these prices, there remains only a handful of nations capable of producing oil at cost-effective levels, and even those have profit margins that leave little to excite.
BHP Billiton has given fresh reason to fear for its ability to pay dividends, as it has announced a $7.2 billion write down on its shale operations. In isolation this would be bad enough but when coupled with the disaster in Brazil, the company’s finances are being seriously tested.
The US reporting season will kick on a gear this afternoon as blue chip finance houses Wells Fargo, BlackRock and Citigroup all release fourth quarter figures. Last night’s confirmation that Goldman Sachs has agreed to pay regulators $5 billion for mis-selling, relating to mortgages, will have seen last second expectations cool somewhat.
The first set of retail sales figures after the important festive season will be closely scrutinised as it may well give an indication as to how robust US consumer spending is. Ahead of the open we expect the Dow Jones to start 231 points lower, at 16,148.