Carney and Draghi both scheduled to speak at the WEF in Davos

 

Today’s UK opening call provides an update on:

• Investors down in the dumps following yesterday’s Chinese data;
• Quiet day for economic data, focus remains on earnings;
• Carney and Draghi both scheduled to speak at the WEF in Davos.

Investor sentiment is continuing to decline as we approach the end of the week. US and Asian indices both posted losses across the board over night and that negativity is now flowing into Europe, with futures pointing to a lower open this morning.

There’s a number of reasons why investors are feeling a little down in the dumps at the moment. The Fed is no longer willing to support the economy on its own and has already starting to scale back its asset purchases, and another reduction will probably be announce next week.

Corporate earnings season has been mixed from an investor standpoint and disappointing from an economic one. Companies have continued to focus on bottom line growth driven by cost-cutting rather than investment and stronger revenues, which is what we’ll need to see if the recovery is going to gather pace this year.

The economic data has been relatively encouraging so far this year, there’s just been a real lack of it over the last couple of weeks. There was a significant increase in the number of releases yesterday but things got off to a bad start as the Chinese manufacturing PMI fell back into contraction territory. Markets never really recovered from this disappointing start, despite some encouraging data from both the eurozone and the US, and that even appears to be carrying over into today.

The only problem now is that there’s a real lack of economic data being released on Friday which means sentiment is going to be driven predominantly by earnings season, which doesn’t fill me with much hope. Once again there’s very few European companies reporting today, although we will get interim results from Royal Mail which I’m sure many will follow closely following its IPO last year.

The World Economic Forum in Davos will continue today so there’ll probably be a lot of noise coming from that which can sometimes have an impact on the markets. Especially when the noise is coming from central bankers, such as Mark Carney and Mario Draghi, both of whom are scheduled speak.

Ahead of the open we expect to see the FTSE up 6 point, the CAC down 3 points and the DAX up 2 points.

Published On Fri, Jan 24 2014, 07:46 GMT