European markets set for mixed opening
It looks like being a caution start to trading for European markets:
IGSquawk
(@IGSquawk)Our European opening calls:$FTSE 7386 up 3
$DAX 12174 down 0
$CAC 5116 up 1$IBEX 10329 down 9$MIB 21599 down 21
Agenda: UK GDP and retail survey in focus
Good morning, and welcome to our rolling coverage of the latest news from the world economy, the financial markets, the eurozone and business.
Central bankers will be gathering at the Jackson Hole mountain resort in the US later for the start a symposium to discuss the key economic issues of the day. The big events will be on Friday, with European Central Bank president Mario Draghi and US Federal Reserve chair Janet Yellen both due to speak. Markets are likely to be nervous ahead of any hints from either about their future policy, whether Draghi hints at an end to the bank’s bond buying programme or Yellen suggests further rate rises are on the way.
Michael Hewson, chief market analyst at CMC Markets, said:
The markets believe that the ECB is on course to begin tapering their stimulus program, and the only unknown is the timing of such measures. Whether Draghi likes it or not the ECB will have to cut back on stimulus simply because the outstanding bonds available to buy is diminishing rapidly, and the continued expansion in economic activity and factory growth points to a fairly resilient recovery in Europe.
The continuing rise in the euro – it is at an eight year high against the pound – causes problems for Draghi in terms of ending stimulus. Any hawkish hints from his Jackson Hole speech could see the euro rise further.
Ahead of all that, today sees the latest revision to UK GDP. The economy grew by 0.3% in the second quarter, according to the initial estimate, up slightly from 0.2% in the first three months but lagging the likes of Germany. Hewson again:
Today’s second estimate will have the benefit of slightly more data to work with, however expectations are for an unchanged reading of 0.3%, with a moderate decline in business investment to 0.2% from 0.6%.
Services once again are expected to make up the lion’s share of the expansion with 0.5%, as the weak pound prompts resilience from overseas visitors in the travel and leisure sector.
The main puzzle remains around the divergence from private survey data, and the ONS numbers which have been uniformly negative.
For all of this year these independent surveys have been much more optimistic, from the likes of the CBI and the Markit, and quite frankly better when it comes to reporting the improvement in order books in terms of surging export markets, as well as rising employment levels in the sector.
There are also CBI retail sales figures for August, and in the US, weekly jobless claims.
We have already had a profit warning from Dixons Carphone, and UK car manufacturing figures, of which more shortly.
As for the pound, it is currently at €1.0833 against the euro, down 0.06% on the day, and 0.13% lower against the dollar at ¢1.2781.
The agenda:
9.30 BST UK second quarter GDP
11.00 BST CBI retail figures
1.30 BST US weekly jobless claims