US and European markets failing to post any gains yesterday

Good Morning All!

Today sees the start of the big announcements of the week as a whole host of economic releases are scheduled for this morning. With markets hit overnight in Asia by yet more unrest in Hong Kong and US and European markets failing to post any gains yesterday we could well need some positive numbers out of this morning’s releases to kick start trading and halt the slide we have seen on the major markets over the last few days. Ahead of the open we expect to see the FTSE100 open flat with the German DAX lower by 10 points.

It will be Europe and the UK that dominate first thing this morning with retail sales and unemployment figures out of Germany that kick us off. Numbers from Europe’s biggest economy have been poor of late and a turnaround in fortunes would be greatly appreciated by Mario Draghi, especially in a week were the ECB could potentially add a full program of QE to tackle the mess that is the European economy. Of course unemployment is an important number however retail sales this morning will give us an indication into the behavioural patterns of the electorate in Germany and will tell us exactly what Germans are spending their money on, if anything when they put their hands in their pockets.

At 0930 BST we get another chance to look at Q2 GDP out of the UK. Mark Carney and the BoE have already mentioned a number of times that the growth situation in the UK is not one that is a concern and if today’s numbers are correct we can see why. The revised reading of Q2 GDp is expected to show that growth was actually a little bigger than first expected at 3.2%. This yet again highlights the stance of the government and BoE, and will leave them to focus, like many other central banks on tier obsession with hiking interest rates and as has been previously stated it is the average earnings figure that is causing the biggest concern here.

With the ECB set to announce further measures to tackle the ultra low inflation problem in the Eurozone, it seems fairly apt that we should get both readings in the same week. So at 1000 BST this morning we will get the CPI reading for the Eurozone. Its safe to say that previous efforts by Mario Draghi and the ECB have failed to tackle the problem. Inflation remains incredibly low on a YoY and MoM basis, and today’s reading is like to show that the number has fallen once again on a monthly basis this time to 0.3%. The question all investors are asking is are the new measures been talked about by the ECB going to be the answer. Over the past 12 months we have seen more or less every tool in the central bankers arsenal thrown at this problem but to no avail. Negative interest rates have made no impression while the pick up for TLTRO’s has been poor. It seems the hopes of the Eurozone now rest solely on a full round of government bond buying, a program that the US are set to finish next month. It no uncertain terms the Eurozone is a mess and it could well be that this week highlights just how big that mess actually is, and just how much new money is going to have to be printed to drag it out of the mire.