Strong earnings help European indices

European markets put their best foot forward on opening amid a flurry of mostly positive company reports from the likes of Airbus, Repsol and Telefonica. The signals from Asia were also helpful with Asian markets closing higher despite slightly worrying Chinese data showing that the country’s manufacturing sector is sailing only just on the side of growth.

In London retailers were the weakest link as the sector keeps losing street sales to online shopping and is struggling with price deflation putting pressure on margins. Retailers remain less than optimistic about the annual Christmas spend fest and their anecdotal evidence of declining sales trends is being backed up by hard economic data – as seen in the official retail data Wednesday. Nevertheless the FTSE held up and rose 1.6% although Next shares slipped over 3% followed by declines in M&S and Tesco.

Oil prices push up inflation across Europe

High oil prices are beginning to strain the euro-zone causing inflation to rise across the largest member economies. France’s inflation is now at 2.5% against the euro-zone’s requirement of 2% while Germany’s hit a 6-year high this month. This will put pressure on the ECB which is due to stop its bond buying programme shortly as it trying to extricate itself from its long term boosting process for the European economy. The euro notched lower against the dollar, yen and the pound, coming under further pressure after German retail sales for September.

UK consumer confidence

UK consumer confidence data due out today comes on the heels of declining retail sales reported Wednesday and like retail sales is likely to reflect consumers’ continued caution ahead of Brexit. The BoE will explain its position on rates given the UK’s weakening economic data Thursday but like with the budget, Brexit will dominate all considerations. The pound’s gentle move higher this morning is a reflection of its relatively cheap price in the eyes traders after recent falls, rather than a sign of genuine market optimism.

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