Major stock markets are lower in the UK and across Europe Thursday as markets fail to capitalise on the modest equity gains made in the US on Wednesday, with very little positivity to be found in data released so far Thursday.
By mid-morning Thursday the FTSE 100 is down 0.8% at 6,662.46, the FTSE 250 is down 1.0% at 15,387.00, and the AIM All-Share is down 0.6% at 773.41.
A similar picture in European majors sees the French CAC 40 down 1.1% and the German DAX 30 down 1.2%.
It has been a very quiet week in terms of top-tier economic data, but any numbers that have been released have painted a disappointing picture compared to the positivity provided by last week's strong US jobs report.
So far Thursday, data has shown the UK trade deficit expanding to GBP9.2 billion in May from GBP8.8 billion in April, disappointing economists that had been looking for a small reduction in the deficit to GBP8.75 billion.
On top of that, French consumer prices showed no growth at all in June, a disappointment compared to the market expectation for 0.1% growth. Meanwhile, Italian industrial output fell by 1.2% in May, missing forecasts for 0.2% growth, and Chinese trade data released overnight was also underwhelming.
"Any chance of a bullish open following the example set by last night's US markets has been derailed, with the pre-market release of poor Chinese trade balance figures and the almost ubiquitously disappointing French data," says IG market analyst Alastair McCaig.
As the equity sell-off continues, the price of precious metals continues to rise due to increased demand for safer assets. Following a number of days of increased demand, analysts say gold has just broken out above a technical level, as the yellow metal has spiked to a near four-month high of USD1,337.90 per ounce. Silver is also at a multi-month high, having risen more than 1% already Thursday, peaking so far at USD21.411 per ounce.
The precious metal miners are therefore providing a little support to the otherwise weak London market. Randgold Resources is up 2.1%, African Barrick Gold is up 1.1%, and Fresnillo is up 0.7%.
Burberry is the stand-out blue chip gainer, up 1.9% after the luxury fashion retailer said it saw strong demand, particularly from Asia, in the first-quarter. Retail sales increased to GBP370 million in the three months to June 30, up from GBP339 million in the same period the prior year.
Burberry did warn that the strength of the pound is hurting its international profits, as did Primark parent Associated British Foods. AB Foods posted a 3% decline in total sales at actual currency exchange rates in the third quarter, hit by the strength of the sterling, but rose 3% on a constant exchange rate basis. AB Foods shares opened higher, but by mid-morning trade down 1.9%.
Recruitment company Hays also has warned about the strength of sterling, saying that its net fee income was flat in its fourth-quarter, as the strength of sterling against the euro and Australian dollar wiped out strong growth in the UK during the period. The stocks leads the FTSE 250 fallers, down 5.2%.
At the other end of the FTSE 250, Premier Oil is up 1.9% after stating its oil production is up 10% in the first half of the year, while Ashmore Group is up almost 2.0% after saying its assets under management increased by 7% over the course of the last quarter.
Still to come after a volatile morning, the Bank of England interest rate decision at midday has the potential to shake things up even further, especially as there are new voting members on the Monetary Policy Committee this month.
Even so, the expectation is for no change to the 0.5% base interest rate of the GBP375 billion stock of asset purchases, which would leave the focus on the release of the meeting minutes on July 23.
US initial jobless claims data will be released at 1330 BST, ahead of which futures trading indicates that a much lower open can be expected on Wall Street, with the DJIA and the S&P 500 both pointing 0.6% lower.
