It’s been a rather mixed start in Europe today with London leading the way lower – news that AbbVie may not proceed with the Shire merger has sent the pharmaceuticals sector lower, but Shire is in an absolute tailspin with shares off by almost 30% so far. Combining this with woes in the petrochmicals sector as crude prices show no signs of finding a floor and many of London’s largest stocks are sporting some healthy losses already. Elsewhere however the situation is looking far more stable with only modest losses so far and the fact that German inflation data came in this morning as expected is precisely the sort of message the market needs for reassurance – even if a print 0.8% flags its own concerns.
Asian stocks have been relatively muted too, with the Nikkei finding support off renewed Yen weakness, whilst the broadly in-line Chinese CPI and PPI numbers have also lent a degree of reassurance. Hong Kong equities remain on the front foot despite what appears to be an escalation in local protests, but as far as the market is concerned, having these issues sidelined as soon as possible is arguably beneficial.
We’re looking at a relatively quiet start to the day on Wall Street with futures pointing towards some modest losses at the open although the big number to watch will be US retail sales, due before the opening bell. Anything that looks too hot here could see the Fed under pressure to accelerate the rate hikes – markets are currently pricing in a move in September 2015. Earnings season also continues with numbers due from names including Bank of America before trade commences but ahead of the open we’re calling the DOW down 10 at 16305 and the S&P down 3 at 1875.