Market selloff intensifies

Early trading so far has seen more losses for equity indices, as central bank moves continue to give cause for concern.

Source: Bloomberg
  • FTSE plummets, raising selloff risk
  • Fed and ECB proving to be drags on markets
  • Chinese CPI drops, raising global disinflation risk
  • Supermarkets fall after retail data slips

Despite futures pointing towards gains overnight, the FTSE 100 has seen yet another significant move lower this morning, compounding the problems faced by bulls after the index became perilously close to sparking yet another big selloff for stocks.

With a three-week low being created yesterday, we now stand just 24 points above the crucial technical support level of 6252 which if broken could see short-sellers come out in force.

Clearly the prospect of a Federal Reserve rate hike in December is worrying markets, despite a more dovish tone being struck by the European Central Bank and Bank of England. However, reports that the ECB will cut the deposit rate in December rather than expanding or extending QE are also somewhat of a let-down, as markets have failed to respond well to any action aside from ECB QE in the past.

Today represents the second of three days where Chinese data dominated the Asian session and once more we have seen a disappointing figure, with Chinese CPI inflation falling to 1.3% from 1.6%.

Alongside last month, we have now seen 0.7% trimmed off this reading in just two months and this freefall does little to dampen the idea of further action of the People's Bank of China which is helping fuel the further devaluation on the yuan. As the yuan falls, so too does global imported inflation, which will no doubt be watched closely by the likes of the ECB and BoE.

Supermarkets are back in the headlights, as WM Morrison and Tesco lead the losses in the FTSE, owing to a report from the BRC which saw the worst October since 2008.

Coming off the back of a stellar September driven by Rugby World Cup beer sales, this announcement has come as a surprise given the relative strength seen in the economy over recent months.

Ahead of the open, we expect the Dow Jones to open around 46 points lower, at 17,684.

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