European stocks fell to a six day low on Tuesday having slipped back from a higher open. The Euro Stoxx 50 index fell as low as 3401, its lowest level since November 2nd.
After a flat open on Tuesday, stocks in the UK sank to a 3 week low. The FTSE 100 dropped as lows as 6267, the lowest level for the benchmark UK stock index since October 15.
Markets lost some momentum heading into the US jobs report and have failed to pick up the pace since. 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. Chinese consumer prices only rose 1.3% year-over-year, below expectations of 1.5% on Tuesday.
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 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 (L:TSCO)’s fell, bringing WM Morrisons (L:MRW) 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 over 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 stocks look set for a lower start on Tuesday. The Dow Jones is set to add to yesterday’s losses, taking it to its lowest level since November 2nd.
USA pre-opening levels
S&P 500: 6 points lower at 2,072
Dow Jones: 54 points lower at 17,676
Nasdaq 100: 14 points lower at 4,641
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