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Global equity markets are in freefall as yet another Chinese shutdown caused mass panic across European futures markets. For many in the City, there was a feeling that the show was over before it begun, with the FTSE 100 already down almost 2% by 7am.
Despite gradually gaining access to the IMF’s SDR basket, it is clear that Chinese markets are in no state to be called developed, with inexperienced regulatory bodies overseeing unsophisticated investors who seem to be in panic mode. The problem is no one knows where this rout will stop and as of yet, the Chinese regulators have yet to show they can instil confidence in any way other than to install draconian measures that limit the function of free markets.
From a UK front, we are seeing a mix of Asian focused anxiety, coupled with widespread selling across commodity stocks as Chinese slowdown fears once more drove down the prices across the industry. Yesterday’s substantial drawdown of US crude inventories proved insufficient to gain any traction for oil prices and as long as China continues to fall, commodities are likely to do exactly the same.
Poundland shares have been hurt more than most this morning, after the retailer warned that pre-tax profits are likely to underperform given a tough Christmas period. One resounding feature of this Christmas was the relatively serene highstreets, with shoppers instead reverting to online shopping. It is this lack of online presence which has been Poundland’s undoing. Coming just two months after the shares dropped over 20% following another profit warning, this marks a worrying trend for a firm which has typically outperformed following the 2007 crisis.
Ahead of the open we expect the Dow Jones to start 403 points lower, at 16,503.