Markets ease further despite unemployment drop

Another day, another disappointing Chinese data release, as inflation crashed by the most in eight months. 

City of London skyline
Source: Bloomberg

Disinflation of course is not always seen as a bad thing for markets, as it encourages looser for longer monetary policy. However, despite expectations that further disinflation in China would spark additional stimulus from the People's Bank of China, the fact is that we have seen precious little economic benefits from the steps already taken and a drastically falling inflation rate can also be perceived as yet another sign that the Chinese economy is cooling.

A mixed UK jobs report did little to steer direction on either Bank of England decision making or market direction. With weaker-than-expected claimant count and earnings numbers being offset by a fall in the unemployment rate, many found today's report hard to decipher. However, it is important to note that the claimant count has now increased three times in four months, which follows almost two-and-a-half years of falling claimant. With unemployment now at a seven-year low, there is a possibility that we are close to full employment where improvements will be marginal.

US retail sales disappointed once more today, further highlighting the slowdown in an economy which has seen employment, trade and industry PMI's deteriorate in recent readings. While the Federal Reserve will have you believe that the only issue delaying a rate hike is external, the fact is that recent signals have pointed towards international crises reaching the shores of America.

A second consecutive spike in Twitter shares came as a result of today's appointment of Omid Kordestani as executive chairman; a senior advisor at Google. The feeling is that Jack Dorsey is finally beginning to turn the cogs, and all that Twitter shareholders have asked is that the firm has a clear roadmap for the future. We are yet to see that roadmap, but the mapmakers are at least becoming clear. However, with yesterday's cost-cutting-driven rally fading overnight, it is clear that investors remain wary that any bounce will be short-lived.

Today saw earnings season continue to move forward in the US, with Bank of America beating expectations while BlackRock saw falling profits. Coming at a time when global markets are attempting to recover from a dramatic China-driven selloff, this earnings season feels like an unwelcome distraction that could unhinge market sentiment once more.

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