European equity markets have continued their decline this morning, taking their cues from a sell-off in China and Hong Kong.
Many mainland Chinese indices were down by more than -2.0% this morning, whilst Hong Kong’s Hang Seng index fell by -3.79% taking its weekly losses to -5.18%.
The index was already a global laggard and is now down by whopping -27.0% over the last 52 weeks, and is trading below all major moving averages.
The sluggish Chinese economy, which does not appear responsive to stimulus, may be in danger of falling into a damaging deflationary spiral, of falling prices and contracting growth.
Q4 GDP data released this morning showed that the Chinese economy expanded by a below-forecast +5.20%.
Data also showed that the population of China continues to decline, falling by more than -2.0 million people last year.
The ECB talks down rate cut hopes
Further hawkish comments from the ECB today, over the timing of any future interest rate cuts, added to the gloomy mood and helped to send the DAX, CAC and MIB indices down by more than -1.00%. This is the second set of hawkish comments this week, from the central bank.
IMI gets singled out
Closer to home the FTSE 100 is down by -1.50% with falls across the board.
The only bright spot in the top 100 this morning is an engineer as the IMI share price is up by +4.60% following an upgrade at Goldman Sachs.
The US bank now rates the stock as a buy and has raised its price target to £20.20, up from £17.80p.
Goldman says that IMI should benefit from a long-term CAPEX (capital expenditure) supercycle and a short-term recovery in industrial production.
UK inflation weighs on the builders
The largest faller in the top flight this morning is from a house builder as the Persimmon share price is down by -4.19%, that despite an upgrade yesterday from US brokers Jefferies.
Fellow builders Taylor Wimpey shares and the Barratt Developments share price are also down on the day.
The sector seems to have reacted to higher-than-anticipated UK inflation data released earlier this morning, which showed that inflation rose by an above-forecast +4.0% in December, denting hopes of an early Bank of England interest rate cut.
Big volume in a troubled retailer
Troubled fast fashion retailer Boohoo Group shares traded more than 29.0 million shares this morning falling by -2.40% in the process.
The stock normally turns over 5.60 million shares per day so it is a significant jump in trading activity.
Looking at the trade recap it appears that two blocks of 10,000,000 shares each traded at 33.335p at 9.38 am.
Has a seller been cleared out? Not, judging by the share price performance, but let’s watch this space.
US index futures suggest that Wall Street will open lower, down by around -0.50%, oil prices have taken another leg lower, with Brent crude down by -1.97%.
Crypto frost
Whilst in the world of cryptocurrencies, Bitcoin continues to drift and is down by another -1.58% today, and by almost -6.0% over the last week.
The launch of spot bitcoin ETFs has not boosted prices as crypto enthusiasts had anticipated.
With over 35 years of finance experience, Darren is a highly respected and knowledgeable industry expert. With an extensive career covering trading, sales, analytics and research, he has a vast knowledge covering every aspect of the financial markets.
During his career, Darren has acted for and advised major hedge funds and investment banks such as GLG, Thames River, Ruby Capital and CQS, Dresdner Kleinwort and HSBC.
In addition to the financial analysis and commentary he provides as an editor at GoodMoneyGuide.com, his work has been featured in publications including Fool.co.uk.
As well as extensive experience of writing financial commentary, he previously worked as a Market Research & Client Relationships Manager at Admiral Markets UK Ltd, before providing expert insights as a market analyst at Pepperstone.
Darren is an expert in areas like currency, CFDs, equities and derivatives and has authored over 260 guides on GoodMoneyGuide.com.
He has an aptitude for explaining trading concepts in a way that newcomers can understand, such as this guide to day trading Forex at Pepperstone.com
Darren has done interviews and analysis for companies like Queso, including an interview on technical trading levels.
A well known authority in the industry, he has provided interviews on Bloomberg (UK), CNBC (UK) Reuters (UK), Tiptv (UK), BNN (Canada) and Asharq Bloomberg Arabia.
You can contact Darren at darrensinden@goodmoneyguide.com
