US jobless claims the only major economic release on Thursday

Good morning,

• Lower inflation and liquidity withdrawals from the PBOC hit Chinese shares;

• FTSE down on China exposure but sterling rallies on new referendum poll;

• US jobless claims the only major economic release on Thursday.

A mixed morning in Europe is providing little direction for US markets ahead of the open, with futures currently pointing to a slightly softer open.

There wasn’t much more direction from Asia overnight, where Chinese shares ended the session lower on deflationary concerns and the People’s Bank of China’s decision to withdraw some liquidity from the financial system. The latter appears to have been done to stem the recent strength being seen in the Chinese Yuan which may be sparked by speculation.

Withdrawing liquidity at a time when people are concerned about inflation in the country, which fell to 2% in August, is not likely to be well received by the markets. The drop in inflation was largely driven by volatile food prices and the number could therefore rebound in the coming months. On a more positive note, the lower inflation figure does give the PBOC an opportunity to increase its targeted stimulus measures in the coming months which could help the country achieve the 7.5% growth target that some see it falling short of currently.

The FTSE’s exposure to China is what’s weighing on the index this morning, but the pound is performing much better in the currency markets after polls showed that voting on the Scottish referendum had moved back in favour of the better together campaign. The poll showed a six point lead for the “no” vote which is a big change from the YouGov poll over the weekend which showed a two point lead for the “yes” vote.

This change may suggest that some of those undecided voters have not been convinced by the lack of guarantees that the independence campaign offers, with the future currency, central bank, monarchy and membership in Europe up in the air. Without assurances on any of these, I can’t see the majority voting for independence and I expect the vote to gap to widen on the voting before next week. Announcements by RBS and Lloyds that they would move their head offices to London if Scotland votes for independence, as well as yesterday’s plea and offering from the UK government to the Scottish people to remain a part of the union is also likely to have swayed some people.

As has been the case for most of the week, the day is looking a little light on the data front. Initial jobless claims data is the only noteworthy release on Thursday and is expected to show another figure around the 300,000 market.

The S&P is currently expected to open 5 points lower, the Dow 44 points lower and the Nasdaq 9 points lower.