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Spreadex Market Update

Tuesday, October 13, 2015 - Afternoon Market Update
Connor Campbell - Market Analyst at Spreadex

Negative UK inflation and year low German ZEW economic sentiment figure take toll on markets

As expected, the pound’s post-SABMiller deal surge soon disappeared as it was revealed that the UK’s inflation turned negative for the second month of 2015, with clothing and fuel prices responsible as they have been (alongside falling food prices) for most of the year. That 0.1% dip into deflation territory didn’t help the FTSE much either and, combined with a further slide into the red for its commodity stocks, helped the UK index widen its losses to 50 points. However, boosted by a soaring SABMIller, following its ‘in principle’ agreement with Anheuser-Busch InBev, the FTSE was one of the better performing indices this Tuesday morning, especially compared with its German cousin.

In a sign of just how tough things have been for Germany of late, its ZEW economic sentiment figure plunged to a year low of 1.9 from 12.1 last month, in stark contrast to the more stable (if still falling) 30.1 from the Eurozone as a whole. The ongoing, China-inspired slowdown in emerging markets, consistently weak manufacturing and services data, the destabilising refugee crisis, Deutsche Bank’s colossal third quarter loss and, most damagingly, the Volkswagen scandal have all taken their toll on Germany’s economic outlook. Even news that VW intends to cut its investment by €1 billion a year couldn’t help matters, leaving the DAX in its all-too familiar 3 digit decline mode.

With a quiet US afternoon ahead, and a 60 point drop for the Dow Jones on the cards at the open, things are unlikely to change as Tuesday continues, today’s data perhaps serving as an unwelcome reminder of the global issues facing the markets after a fortnight of exuberant trading.

Recent Posts:
Morning Market Comment 13/10/2015
Evening Market Comment 12/10/2015
Afternoon Market Comment 12/10/2015
Stock of the day 12/10/2015 - WH Smith PLC
Weekend Paper Roundup 12/10/2015

The Trading Day and Week Ahead

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If you are unsure what different Economic Figures mean take a look at our Economic Indicators Explained guide.

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