Intraday Market Thoughts

European Equities Set for Another Plunge

by Kyle Morrison
Aug 9, 2011 8:35

European equities set to plunge on the open, after US falls, UK manufacturing data to give clues about Q3 growth, China economic data shows further tightening remains possible, while markets await FOMC, as gold continues to soar

European markets are expected to open significantly lower today after last nights plunge in the Dow, as fears about another global recession grow.

Concerns about Q3 growth prospects in the UK could well be reinforced this morning with the release of industrial and manufacturing production data for June with expectations of a significant drop from Mays numbers. Expectations are for a drop to 0.4% from 0.8% for industrial production, while manufacturing is expected to drop from 1.8% to 0.3%.

Trade balance numbers for June are expected to come in at -8.1bn from -8.48bn in May. With the Bank of England quarterly inflation report due tomorrow any disappointment here is likely to be a prelude to a significant downgrade of this years growth forecast.

Chinese CPI data for July shows no signs of slowing down despite the recent tightening efforts of the Peoples Bank of China, coming in above expectations at 6.5%, raising expectations that the Chinese authorities may look at further tightening measures. Given the current turmoil in global markets, however and falling commodity prices the Chinese authorities may well opt to wait and see. Industrial production data for July and retail sales data which was expected to be released appears to have been delayed until later in the week.

Japanese consumer confidence for July increased from 35.3 in June to 37 in signs that the Japanese consumer continues to struggle in the wake of the effects of the March tsunami.

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Later this afternoon markets await the latest FOMC meeting where market participants will be looking to gauge whether Bernanke will give any clues as to the timing of a possible QE3, given the falls in equity markets in recent days.

Gold prices have continued to make record highs against the US dollar, single currency and the pound as investors flee to the perceived safety of the yellow metal.


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