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Early trading defined by downgrading of China’s credit

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The European markets all slipped back this morning, with early trading defined by Moody’s first downgrading of China’s credit rating since 1989.

Spreadex Analyst, Connor Campbell noted – “The FTSE shed 0.2% after the bell, putting around 20 or so points between the index and its previous 7500 home. A substantial chunk of those losses comes from the mining sector, the likes of Rio Tinto and Anglo American displeased by Moody’s Chinese comments – the agency said that the country’s ‘financial strength will erode somewhat over the coming years’ – especially since they come roughly a week after the announcement of President Xi’s $900 billion ‘Belt and Road initiative’.”

There was some Corporate news for investors to digest this morning. Marks & Spencer net profits dropped on weak clothing and non-food products, while Kingfisher Q1 sales are weak but on track for 2yr strategic milestones. MediClinic has maintained its dividend and expects a gradual Middle East improvement, Babcock profits have increased and a dividend increase will give shareholders cheer, Vedanta looks to it’s 2018 results with more confidence than ever and Pennon is well positioned, raising it’s dividend.

Over in the US, equity markets finished Tuesday in positive territory, marking a 4-day up trend, with the S&P 500 closing only a handful of points from a fresh record closing high.

Accendo Markets Analyst, Mike van Dulken commented – “Financials led both the S&P and the Dow Jones as Goldman Sachs outperformed, while the Nasdaq gained despite Apple falling. Note, hawkish talk from Philly Fed President Harker after market close, stating ‘a June rate hike is definitely on the cards’.”

Yesterday’s US data was mixed but dollar traders continued to buy US currency against its major counterparties; pushing it higher against the euro, pound and yen.

ADS Securities Analyst, Konstantinos Anthis suggested – “The question is whether we are at the start of a deeper correction, which will be supported by the release of the FOMC meeting minutes, or whether the dollar will continue its bearish run. The odds of a June rate hike are at close to 100%, but the fundamental outlook still points to the downside due to the recent weak data from the US and President Trump’s inability to focus his efforts on his reforms’ agenda.”

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This article does not constitute investment advice. Make sure you do your own research or consult a professional advisor.

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