Europe sinks thanks to poor economic outlook

In mid-morning trading, the FTSE 100 is 20 points lower, while European markets digest a Daimler profit warning.

• London struggles to move higher

• Germany narrowly avoids recession

• Burberry rallies on sales growth and Tencent deal

European and UK markets continue to edge lower, although without much conviction. A profit warning from Daimler is helping to cancel out what little positive sentiment might have been created by the surprise German GDP reading for Q3, although even here it feels like ‘recession delayed’ rather than ‘recession avoided’; after all, if this is all the ECB’s QE programme over the past few years can get then questions should really be asked. 0.1% is really a rounding error, and perhaps rightly the market is paying more attention to Daimler as a much better indicator of broader global economic problems. Speaking of which, a slew of China data overnight also points to weakness, which was reflected in Asian markets overnight and is also bearing on US futures. All this should provide the spark for an equity pullback, but despite almost everyone predicting that one is round the corner, the looked-for drop refuses to appear.

Burberry’s warning about Hong Kong unrest hitting performance was ignored as the shares advanced 4.5% in morning trading. The firm’s partnership with Tencent promises to offset any Hong-Kong related weakness, while sales in other parts of Asia are also pointing towards further solid growth. At 23 times forward earnings, Burberry needs a positive catalyst to drive further gains, and the Tencent deal may be just the ticket. Investors who have endured stomach-churning volatility in the shares since summer 2018 will be hoping that it is.

Ahead of the open, we expect the Dow to start at 27,783, unchanged from yesterday’s close.