Weak commodities ensure a soft FTSE

The fifth month of contraction in a row for Chinese manufacturing PMI data has ensured renewed pressure on commodities, and as night follows day the mining sector has duly tumbled. 

City of London
Source: Bloomberg

A morning of disappointing PMI data, stretching from China to Europe, has given markets a sorry start to the last trading day of the week - presumably not wanting to ruin the symmetry of the rest of the week. The FTSE as ever is disproportionately weaker due to its heavier weighting to the mining sector, or possibly just down to the fact traders are expecting a month’s worth of rain over the course of the day. With Greece no longer clouding everyone’s judgment, it looks like the investment community has finally had an opportunity to digest just how uninspiring some of the economic data is.

Pearson's spot at the top of the FTSE risers this morning is ample proof of the markets’ view that although the FT might well have an enviable history behind it, $1.3 billion is an offer too good to refuse. Vodafone also posted figures and although there might not be any stand-out regional performances, equally there’s nothing that might derail any future M&A activity either. This morning’s profit warning from Aggreko is yet another reminder that the heady days of 2012 and the London Olympics are well behind them as the markets have knocked 15% off the company in only an hour’s worth of trading.

The general perception was that the bar had been set particularly low for US corporates in this latest reporting season and with two thirds of the Dow having now reported, 95% have beaten expectations. What level of credibility we should ascribe to institutional expectations is arguably the biggest question that this raises. Amazon saw its shares spike by almost 18% in after-hours trading following the release of its latest figures, which showed marked North American revenue growth in complete contrast to the contraction the markets had been anticipating. 

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