China pressure on mining sector weighs on FTSE

November's slowing factory growth in China has put pressure on the mining sector today, leaving the FTSE 100 once again unable to gain a foothold above the 6700 level. 

The less-than-optimistic outlook for global growth has seen the mining sector shed a total of 18% year-to-date, and has also seen the FTSE 100 underperform against Spain and Italy today.

British manufacturing sees triumph

A day packed with macro-economic data saw another positive data-point for the UK economy; British manufacturing output rose at its fastest pace for 18 years on the back of an uplift in new orders. Public sector net borrowing also improved, owing to a recovering housing market and the well-established stronger economic growth.

Eurozone data held a little less cheer, as while German manufacturing and services output beat expectations the overall composite figures fell back from the previous month. Output remains above the key 50 level, which indicates expansion, but it seems to be heading the wrong direction.

A broker upgrade on the back of better-than-expected earnings for Johnson Matthey saw the specialty chemicals firm rise to the top of the FTSE today. The share price added 3.65%, boosted by new European rules on emissions which are due to come into effect early next year.

Yellen confirmation boosts US indices

A mere formality, though not a unanimous decision; Janet Yellen's appointment as chairwoman of the Federal Reserve has been formally approved by the US Senate banking committee. This resulted in a kneejerk effect which helped push US indices a little higher. Ms Yellen's recent dovish comments should help sustain this bullish momentum for a little longer, although any better-than-expected economic data has and will probably continue to be treated as a negative for the equity bulls.

An unexpected drop in jobless claims also helped to lift US indices in early trade. Weekly jobless claims fell 21,000 to 323,000 – a touch better than the 344,000 expected. This gives weight to some Federal Open Market Committee members' views that the US economy is starting to show signs of life. When digested by the markets, however, it does bring the imminent prospect of quantitative easing tapering into sharp relief. With some predicting a token taper as early as next month, any strength in next month’s payrolls number is likely to bring additional caution to risky assets.

Conversely, the Philadelphia Federal Reserve manufacturing survey shows a dropback to 6.5 in November, following last month’s 19.8. This is well below expectations and comes as a result of a very high inventory component. 

The employment section of the index saw its biggest decline since June 2011. This has taken some of the steam out of the initial upward moves seen in US equities, and has also seen the greenback weaken slightly.

The Dow Jones seems destined to falter any time it comes within striking distance of the 16,000 level. The index is currently trading up 69 points at 15,969.

Gold at four-month low

Gold continues its relentless trip southwards, falling to a four-month low and consolidating around $1240/oz. Optimism among some FOMC members regarding the US economy has fuelled potential plans to wind down the current asset purchases, which has given strength to the US dollar. The chase for yield and lack of any immediate inflation concerns are also keeping potential gold investors away.

Pound and euro see gains

The euro regained some its poise today on the back of Mario Draghi's rebuttal of yesterday’s rumours of a negative deposit rate.

The pound has also seen additional gains as economic data for the UK continues to print in line with or above expectations. 

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