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The overnight rally in the Nikkei has done its best to raise the morale of European traders, but the complete lack of any progress from the US political scene is squashing any optimism markets can muster. It's unlikely that investors will be able to find any solace from the UK’s economic data releases, after monthly manufacturing, industrial production and trade balance figures all came in worse-than-expected. This raft of negative news will take some of the smile off chancellor George Osborne’s face, following yesterday’s resounding endorsement of tactics from the International Monetary Fund.
Despite being able to inform markets of increased output in its zinc, oil and gas divisions, a downgrade by Morgan Stanley has thumped shares in Vedanta Resources, and in the first hour of trading shares were down by almost 5%. Last night’s poor performance by Apple has had the knock-on effect of sending Arm Holdings down in early trading, with the chip-maker firmly among the five biggest FTSE losers.
Applications for the Royal Mail IPO were being processed right up to the midnight deadline yesterday and indications are that it is heavily oversubscribed, which should ensure the final price is closer to the top of the range at £3.30. Early day trading in our Royal Mail grey market has seen further profit-taking as the client-driven price has drifted down to £3.875. However this is still at a healthy premium to the anticipated IPO price.
The US reporting season started with a whimper rather than a bang last night, as almost all eyes are still trained on the political circus that Washington is currently providing. The constant bickering by both the Republicans and the Democrats have seen almost a 1000 points wiped off the Dow Jones in the last four weeks, and with no end in sight US markets looks set to tumble even further. Ahead of the open however, we currently expect the Dow to start 33 points higher at 14,809.