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Stock markets in Europe are trading lower this morning as a combination of sliding mineral stocks and disappointing corporate updates has eroded market confidence. There is a lack of macro-economic news today and given the decline equity markets have been in since the summer, traders need a flow of positive news to go long. Dealers have become too dependent upon easing from central banks, and despite dwindling inflation in Japan and the eurozone, the respective central banks aren’t in any rush to expand their stimulus packages.
The Chinese growth figures at the start of the week are still hanging over the natural resources sector, and I think these numbers will be a slow burn and they will keep gnawing away at the mining industry. The GDP figures were poor enough to put pressure on the commodity space, but not so bad as to warrant a new round of easing from Beijing.
Home Retail Group is having its own ‘black Wednesday’ over sales concerns ahead of next month’s ‘Black Friday’. The restructuring of Homebase is starting to pay off, but the Argos division is still weighing on the group, and a plunge in share price before the busy Christmas period does not give out the right signal.
In the US, we are expecting the Dow Jones to open 30 points higher, at 17,247 as the market shrugs off the decline in Europe. The focus will shift to industrial stocks now that the major US banks have revealed their results, and updates from Boeing and Baker Hughes will be the highlight of the session.