In mid-morning trading the FTSE 100 is falling fast, and the weak Chinese trade figure is weighing on commodity stocks.
- Chinese imports data disappoints
- Mining companies fall again
- UK CPI turns negative
Equity markets are lower after disappointing Chinese imports readings highlighted the economic slowdown in the country. Natural resource stocks were the worst hit by the Chinese trade figures, and as imports have declined for eleven consecutive months it paints a very clear picture that the second largest economy in the world isn’t as hungry for commodities as it once was. It is not just commodity companies that are feeling the effects of the dreadful Chinese data; European car makers and high-end fashion stocks are feeling the pinch as the middle class in China are becoming more prudent.
Bucking the trend is homebuilder Bellway, with the stock up over 3% after registering a record number of sales. These is no stopping the housebuilder as rising house prices and ultra-low interest rates are providing excellent conditions for the company to thrive in. After much ‘will they, won’t they’, it finally looks like a deal has been struck between AB InBev and SAB Miller, which has pushed both stocks higher. Sterling was sent tumbling after the UK revealed that inflation turned negative in September, and already deflation fears are playing in traders’ minds. The Bank of England will be worried that the UK could be in for a prolonged period of negative CPI, while mortgage holders can remain confident their monthly repayments won’t be rising any time soon.
In the US, we are expecting the Dow Jones to open 60 points lower at 17,060. US dealers are worried about China’s economic slowdown, and the devaluation of the yuan will hurt US exports in months to come. Investors are gearing up for the JP Morgan Chase results today, which is the first of the US banks to announce its numbers.
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