Another positive finish on Wall Street which pushed all the major indices in the positive territory yesterday, and as this was mostly fuelled by the raft of good earnings reports have failed to filter through to the European markets, which are trading lower. The US futures are also trading lower this morning despite a positive earnings release during aftermarket hours from Microsoft and Amazon.
European markets were able to shrug of the disappointed data released from the French and German officials yesterday, but the same translation may not work ahead of the German IFO Business climate number which is due at 08:00 GMT. The disappointment which most traders felt yesterday could easily be blamed on the strength of the euro which is getting ahead of the curve, while the fundamental problems are still not addressed, and this a concern for most business owners.
Having said all that, investors are optimistic ahead of today’s German IFO data, and the broader sentiment is that yesterday economic data may not be nothing more than just a minor setback, given that both the Spanish and French economies have eked out of a recession. German IFO numbers are always considered as a better broader gauge of business sentiment and the forecast is for 108.2 while the previous reading was at 107.7. If the final number does disappoint investors, this could increase the pressure on ECB to boost lending across the Eurozone
The sterling economy on the other hand does not seem to have any problem when it comes to their economic growth, and striving as it is, the questions are only wrapped around the credibility of the national Office of Statistic, and the data which it releases. The Market PMI data for the sterling economy have been tremendously good across the board which unwind the event that the GDP for the Q3 could be astonishingly good, but the ONS did not echo the same optimism when they released their reading for the manufacturing and industrial production for the month of August.
Therefore, investors may hold their horses today before they fully react to the first estimat3es of Q3 which is widely expected to be at 0.8% while the previous reading was for last month was 0.7%. If we do see a final figure which is below the estimates, this could be translated as a bearish signal for GBP and for the FTSE100 and more questions will be raised about the reliability and credibility of the independent data and the official data.
Back in US, the economic docket does have few important bits which could flare the markets. The core durable good order which were delayed due to the government shutdown will be released today and the expectation is for 0.6% while the previous reading was -0.1%.