The FTSE 100 is down ten points in early trading, as some of Monday’s bullishness fizzles out. 

  • European markets fail to hold early gains.

  • Luxury stocks fall on China fears.

  • UK employment recovery still in play, but fears of a slowdown abound.

Early trading this morning seemed to promise a positive day ahead for stock markets, after Monday's session resolved overall into a move higher. But that optimism has dimmed as the session goes on, and indices are struggling to make headway. 2021 has been consistent in its trends, and mid-month weakness is an established fact, so in one sense we should not be surprised to see stocks make heavy going of it. Of course, with US CPI on the calendar today some hesitation is not very surprising either. We can expect today's numbers to be rapidly deployed in the service of the arguments for and against Fed tapering, although as noted before we are really debating when, not whether, they will cut back asset purchases. Concerns about China growth are always a good bet as to why luxury stocks are down, and with Burberry leading the fallers in London and French luxury stocks weighing on the CAC it is clear that the market is still concerned about how China's new direction will hit demand.

The UK economy is continuing to make headway it seems, although the number of vacancies points towards plenty of slack in the economy that may well mean the BoE is more hesitant about raising rates and/or tapering asset purchases. That the economy continues to show so much life is undoubtedly a good thing, but some optimism will be tempered given how the rate of improvement appears to have slowed of late. 

Ahead of the open, we expect the Dow to start at 34,913,  up 44 points from Monday’s close.

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