UK & Europe
European stocks fell to a six day low on Tuesday but recovered some of the early losses. The Euro Stoxx 50 index fell below 3400 for the first time since November 2nd.
Stocks in the UK sank to a one month low. The FTSE 100 dropped as lows as 6250, the lowest level for the benchmark UK stock index since October 5.
The market decline this week has been far from dramatic, which suggests investors could be ready to pounce on the next bullish piece of market information. The loss of momentum that first began heading into the US jobs report on Fridayhas been extended over Monday and Tuesday owed to the couple of disappointing pieces of data from China.
ECB member and Bundesbank president Jens Weidman dampened sentiment further on Tuesday after talking up the risks that ultra-low interest rates could present for financial stability.
In a reversal of fortunes from yesterday, basic materials and financial sectors are acting as a drag on the FTSE 100 with telecommunications and property stocks providing some relief. A number of well-received earnings reports have weighed down by poor Chinese data that threatens the demand for commodities from UK-listed mining and oil companies.
An extension of its share buyback program, a dividend hike and strong organic growth helped Experian PLC (L:EXPN) shares to the top of the FTSE 100. Investors have taken well to the company’s positive outlook but there are headwinds that suggest the capital returns to shareholders might be a bit foolhardy. The gains came despite weaker revenue and higher costs that weighed on profits as well as an announcement that the credit rating agency has received a class action lawsuit because of the breach of T-Mobile customer data.
Shares of Tesco’s fell, bringing Morrisons down with them after Tesco (L:TSCO) Chief Executive Dave Lewis described higher business rates, rising wages and lower profits as a “lethal cocktail” for the supermarket. Mr Lewis is right to bring up the unfair tax advantage that online retailers enjoy over brick-and-mortar. It’s something Tesco is particularly sensitive to with its large real estate portfolio that Mr Lewis has started to cut back since joining the firm.
Vodafone (L:VOD) shares gained after keeping guidance at the upper half of its range on the back of a return to earnings growth in the third quarter.
A jump in ad revenue during the Rugby World Cup has helped ITV (L:ITV) third quarter earnings. Pre-ordered ad slots and good sportsmanship amongst English supporters meant the national team’s dismal performance didn’t dent viewing figures and earnings for ITV.
US
US stocks opened lower on Tuesday but the Dow Jones traded mostly inside yesterday’s price range despite a fall of over 2.5% in Apple shares (O:AAPL).
Chinese consumer prices only rose 1.3% year-over-year, below expectations of 1.5% on Tuesday, this follows weak export data at the start of the week.
The strong US labour market data has pushed the odds of a December rate hike above 70% but data from around the world suggests a hike would be in a an environment of low global inflation and slowing growth.
FX
The dollar was uniformly stronger on Tuesday with most major currencies giving up the small gains made on Monday.Monday’s anti-dollar sentiment proved a very short-lived pause for breath after Chicago Fed president Charles Evans, an avowed dove, said he would not reject a rate hike in December if there was consensus. Dollar bulls have re-emerged on expectations of a December rate-hike from the Fed when all other central banks, including the Bank of England aren’t event on the tightening spectrum.
The euro made a fresh six month low versus the dollar while also falling against the pound. EUR/USD dropped beneath 1.07 for the first time since April 23. The pound was mostly unchanged against the dollar with GBP/USD hovering around 1.51.
Commodities
Crude oil fell for a fifth day ahead of another expected build in API inventories against a strong dollar backdrop that is making it hard for any commodity to make any ground. Brent crude again dipped below $47 per barrel.
Having gained for the first time in eight days on Monday, gold sank back again to below $1,090 per oz on Tuesday. Sentiment in gold has turned very bearish, which a contrarian might point as the first sign of a bottom but at the current momentum, there could even be a new six year low this week.
Silver fell for the ninth day in a row, making a new seven week low, dropping below $14.40 per oz for the first time sinceSeptember 16.
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