Chinese Data Shrugged Off as Equity Markets Edge Slightly Lower

European equity markets are expected to open a little lower on Tuesday, following similar moves in Asia overnight and a flat opening session in the US.

There doesn’t seem to be much really driving the markets right now and what little there is doesn’t appear to be having a great impact. The Chinese data overnight disappointed across the board and investors pretty much shrugged it off, although it’s worth noting they were only marginal misses and were in keeping with the broader trend.

Sterling Under Pressure as Pressure on May Mounts
The pound is coming under a little pressure again this morning, having already suffered decent losses at the start of the week as political concerns resurface as a critical time for Brexit negotiations. Theresa May’s position is looking increasingly under threat as a growing number of her own party scheme behind the scenes to replace her.

Not only does this create political uncertainty at a time when the country is in desperate need of the opposite, it could also further delay or disrupt Brexit negotiations which are already progressing at a snail’s pace. MPs will begin debating a hundreds of proposed amendments to the EU Withdrawal Bill today, which will include enshrining a leaving date and time into law, leaving little flexibility for parliament if negotiations run until the last minute or run out of time altogether.

Sterling is likely to remain volatile today, with inflation data due out for October this morning and Bank of England Governor Mark Carney speaking shortly after. The central bank has previously claimed inflation would peak in October just above 3%, which will require Carney to write a letter to Chancellor Philip Hammond explaining the reason for the overshoot, even if the reason is quite obvious.

Central Bank Event Sees Fed, ECB, BoJ and BoE Heads Join Panel Discussion
The BoE raised interest rates earlier this month in an attempt to rein it in a little, a move many have questioned given its effectiveness at a time of significant economic uncertainty for the country. Carney will appear alongside the heads of the ECB, Federal Reserve and Bank of Japan this morning in a panel discussion at a central bank event in Frankfurt, which will be closely followed by traders.

That said, with the ECB having only recently announced a nine month extension and cut to its asset purchases, the BoE having raised rates and Yellen’s successor having been announced, I do wonder how much insight we’ll actually get today.

German GDP and Inflation Data Gets Us Off to an Underwhelming Start
German GDP provided no surprises this morning, with the economy growing a respectable 2.3% in the third quarter compared to a year ago, in line with expectations. Inflation also rose 1.6%, unchanged from the previous month and also in line with expectations.