European cash equity markets are mostly lower ahead of the midway stage (FTSE -0.7%, DAX -0.2%, CAC -0.1%, FTSE MIB +0.1%). Basic resource stocks are among the worst performers following disappointing Chinese macro data overnight and tempered expectations surrounding US-China trade negotiations. After USTR Lighthizer said yesterday that there is still a long way to go in talks, President Trump said this morning that he is not afraid to walk away without a deal. From a regional perspective, the FTSE 100 has underperformed for a third day with the UK benchmark touching a three-week low as miners and a stronger currency weigh. Gbp/Usd it little changed for the day but remains in close proximity to yesterday’s seven-month high as the threat of a no-deal Brexit appears to have receded this week. Yesterday’s votes in the UK parliament do not appear to have changed much although there have been rumours that the meaningful vote could be held as early as next week. In the bond markets, US ten-year yields are slightly lower for the day while German ten-year borrowing costs are slightly higher after a barrage of data releases this morning. German State CPI’s were the main focus and we saw higher year-on-year prints in four of the six regions compared to the prior month while two were unchanged. French, Spanish and Italian CPI prints were largely in line with expectations as was French GDP. Turning to currency space, data releases have had more of an impact with stronger-than-expected GDP data propelling the Swedish Krona to the top of the G10 pile while the Swiss Franc is the weakest of soft Q4 growth figures. The Dollar Index has lost -0.2% to 95.9 with minor outperformance seen in the Euro and the Japanese Yen. Elsewhere, oil prices have reversed some of yesterday’s rally with US crude futures down -0.7% while spot gold has added +0.4%. Looking ahead, futures are pointing to a lower open on Wall Street with US fourth-quarter GDP data due for release at 13:30 GMT (08:30 ET). We also await Chicago PMI and Canadian producer prices plus pan-German CPI and possible comments from the Fed’s Clarida, Bostic and Harker.
For a more detailed report please visit the ‘Market Research’ section.
