The slashing of global growth forecasts by the IMF yesterday and news that Chinese imports and exports missed expectations by a massive margin has dented sentiment to a degree today. With the minutes of the FOMC meeting due out this evening, there is a distinct element of caution to be felt in early trade as investors await further information about US monetary policy. The compunction to take on risk ahead of Ben Bernanke’s speech is likely to thin on the ground as the day progresses.
The Italian bourse has lagged behind its European counterparts while the country’s bond yields edge higher, owing to the credit rating downgrade from Standard and Poor's. The timing for the downgrade, which places Italy’s rating just two notches above junk with a negative outlook, is certainly unfortunate timing given that the country is to sell €9.5 billion in short-term debt today. Italy's cost of borrowing has now hit a four-month high. This, coupled with the European Central Bank stating what has been patently obvious to many, that the eurozone crisis is not yet over, is also keeping a firm cap on excessive optimism.
Luxury brand Burberry has announced double-digit profit growth, showing that the strategy for diversification of products is working. Investors shrugged off any concerns over Chinese demand, choosing to focus instead on the potential increase in western spending, sending the shares higher by as much as 5% in early trade. However the usual volatility associated with earnings day for the company has seen the shares pare back early gains. The Dow Jones is currently looking to open down 30 points at 15,270.