European markets are trading near the flat line today after the DAX recorded another record high yesterday. Equity traders are certainly comfortable with the idea of 10,000 level of the DAX as a new norm which once used to be a major resistance. However, the recent cut in the growth forecasts by the World Bank yesterday are weighing on sentiment today. Some of these cuts are understandable, such as Russia which dominated the headlines of geopolitical tensions and obviously paid the cost. But, a growth cut in the strongest economy’s of the eurozone, UK, has shocked traders when the bank slashed the number to 2.8%. The forecast for the world economy now stands at 0.8%.
On the equity front, Emirates have cut 70 orders for the Airbus A350 planes. Although this is a massive blow for Airbus, we believe the demand for these planes is still strong and these planes could be bought be Qatar which does need to extend their fleet of aircrafts. The A350 was not truly in line with the fleet requirement of Emirates, and reducing the orders for these is a strategic decision by the airline.
Back in the UK, the main focus will will be towards the unemployment number. The forecast is for a further drop in this number to 6.7% from 6.8%. Jobless claims may very well continue their tradition of a downward slide and we may see the final number drop by 25K. The manufacturing and industrial production data released yesterday was another gift from heaven. It showed an increase at the fastest pace since 2011.
Disclosure: The above is for informational purposes only and NOT to be construed as specific trading advice. Responsibility for trade decisions is solely with the reader. By Naeem Aslam.