Market Commentary | Chinese data sends markets lower

European stocks were in the red for a second consecutive day on Thursday, as weak Chinese data triggered a slide in mining stocks, while investors pored over the latest minutes from the US Federal Reserve. Poor Chinese data shook Asian markets and Fed fears continued to weigh on Wall Street, which was also trading sharply lower on Thursday.

The mining sector slumped more than 3%, as copper prices fell sharply during the session. In Asia trade — where markets finished mixed — China's exports slipped close to 10% year on year in dollar terms, and imports fell 1.9% from the previous year.

This caused the basic resources sector to slide in trade, with BHP Billiton and Rio Tinto both off more than 4.5% after Citigroup cut its outlook on both stocks from “neutral” to “sell”. ArcelorMittal was also sharply lower, after Goldman Sachs lowered its rating on the stock to “neutral” from “buy”.

Similarly trading in negative territory were shares of Standard Life after a ratings downgrade. Shares sank 5% after Barclays downgraded the company to underweight from equal weight, flagging concerns about the poor performance of the insurer’s flagship fund over the past 18 months.

Elsewhere in commodities, investors remained on edge over the volatility seen in the oil price, after OPEC reported that its oil production rose in September to its highest level in at least eight years, despite the oil cartel potentially planning to cut output.

Meanwhile, investors in Europe are currently poring over the recent minutes released by the US central bank. Despite the Fed choosing not to raise interest rates in September, three members of the Federal Open Market Committee dissented and called for a rate hike.

On the individual stock front, Unilever shares tumbled 3.5% despite the firm reporting a 3.2% rise in underlying sales in the third quarter. The negative sentiment towards the stock comes as Tesco, Britain's largest supermarket chain, pulled a number of Unilever products from its website over price increases. Tesco shares were also deep in the red.

Financials skidded on Thursday, as investors brace themselves for third quarter earnings from some of the world’s largest banks. Italian banks were back in the limelight on Thursday. Unicredit was off more than 3% after it sold a 20% stake in its online broker business FinecoBank in a move that raised €552 million. Several other Italian banks were also deep in the red, including Banco Popolare, Banca Popolare di Milano and Banca Popolare dell'Emilia Romagna.

Citigroup, Wells Fargo and JP Morgan Chase are expected to report on Friday.

This article was issued by Rebecca Naudi, Trader at Calamatta Cuschieri. For more information visit, www.cc.com.mt. The information, view and opinions provided in this article is being provided solely for educational and informational purposes and should not be construed as investment advice, advice concerning particular investments or investment decisions, or tax or legal advice. Calamatta Cuschieri Investments Services Ltd has not verified and consequently neither warrants the accuracy nor the veracity of any information, views or opinions appearing on this website.