David Becker
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European stock markets mostly down. Stock markets headed south as key earnings reports from companies such as Siemens failed to lift sentiment as investors kept an eye on Trump’s visit to China. Basic resources shares were hit by a decline in industrial metals prices and optimistic comments from the ECB and the European Commission on the growth outlook and dovish signals from Coeure failed to lift sentiment. Only the Italian MIB managed small gains as bank stocks rallied following conciliatory comments from Nouy on new NPL rules as lawmakers questioned the ECB proposal. The DAX is down -on the day, still close to record highs, the FTSE 100 is outperforming amid a weaker pound, while the MIB so far managed to defend a small gain, although the index is also down from earlier highs. The lackluster session in Europe, followed a largely positive close in Asia, which took its cues from record levels on Wall Street. Japanese indices climbed to a 25 year high before a stronger Yen and technical trading hit markets, leaving the Nikkei down -0.20% at the close.

German growth to exceed potential through to 2019

The updated set of forecasts from the European Commission sees growth at 2.2% this year, 2.1% in 2018 and 2.0% in 2019. Still considerably below most estimates for German potential growth over that period. This ties in with warnings voiced by Germany’s council of economic advisors yesterday, who also highlighted capacity constraints. For the ECB though growth is not strong enough and Coeure defended again the ECB’s decision to keep pumping funds into the economy next year.

China’s consumer inflation increased to 1.9% in October, year over year compared to expectations that CPI would rise by 1.8% according to the National Bureau of Statistics. This compares to a 1.6% increase in September. Prices at the wholesale level surged 6.9% year over year but was unchanged from September.  Expectations were for PPI to rise by 6.6%.

UK house price decline is spreading out of London, according to respondents in the latest RICS survey. The headline, pan-nation figure showing prices rising by 1.0% year over year, below the 2.9% inflation rate and well off average wage growth of near 2.0%, and down sharply from the 6.0% year over year growth seen in the September survey. The survey found house prices are now in decline in the South East, East Anglia and north-east England, in addition to London, where prices have been in a downward motion for some months now.

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