Concerns over slowing global growth are starting to filter through to financial markets. Data out of China yesterday confirmed a weaker print for GDP as expected and despite and uptick in Industrial Production and Retail Sales investors are preparing for a downturn in sentiment. The IMF has significantly cut its growth projections again from 3.7% to 3.5% for 2019 citing continuing trade tensions, weaker demand from Europe and fragile financial markets as reasons for the revision. US stock markets were closed yesterday and Asian indices look set for a muted start to the day after European stocks mainly fell and the majority of fresh news pointed towards a downside correction. The dollar remained relatively steady with the Dxy continuing to trade around 96.35 and Oil remained bid.
Brexit remains a major concern for UK markets and progress appears to be limited with PM Theresa May advising parliament yesterday that although she will be more flexible, however her position hasn’t changed since last week and there will be no second referendum. With deadlines fast approaching and what seems to be a real impasse between the various sides involved, the prospect of a hard ‘no deal’ Brexit appears to becoming more likely. If indications continue to push this way expect the pound to come under increasing pressure in the short term an growth expectations for the UK and Europe to pull back over the longer term. Once again though, it feels like there is a lot more to come in the Brexit story and traders will continue to brace for further volatility until a clearer picture emerges.
Looking ahead to todays trading day and it’s very quiet on the data front during the Asian session. The focus will be firmly on the UK once the London market opens with Brexit news still front of mind for investors, however there’s also the latest Average Earnings and Employment data due today to add to the mix. The US markets will open later in the day after yesterdays holiday and expect sentiment to continue to dominate flow with little in the way of fundamental data due out.