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Trader Talk: An Analysis of the Markets this Morning

Good morning,

Markets are called lower this morning.

A negative for the markets – China is stressing the resilience of the world’s second-iggest economy even as analysts forecast the slowest pace of xpansion since 1990 amid government efforts to rein in leverage nd expand the role of markets. Stocks tumbled today on concern anks have tightened property lending and after new-home prices ose in Beijing and Shanghai in January at the slowest pace ince 2012.

Despite the market taking this news as a negative, the Group-of-20 policy makers meeting in Sydney singled out China among emerging nations exhibiting continued solid growth. They also pledged a coordinated push to add the equivalent of $2 trillion to the global economy through faster growth over the next five years.

A postitive for the markets - European Central Bank President Mario Draghi said policy makers are ready to add to stimulus if the outlook for prices deteriorates, though there are currently no signs of deflation in the euro area.

We are expecting growth in China to come in at 7.5% in 2015. Any rate lower than this would trigger a revaluation of our forecasts. However, at this point in time, we see no reason why this rate cannot be achieved.

Stock to watch: HSBC

Increased demand for UK mortgages expected to boost profits at Britain’s biggest bank. HSBC is expected to unveil its highest profits since the onset of the financial crisis on Monday, fuelled by a surge in mortgage lending as the UK’s economic recovery gathers pace.

Pre-tax profits at Britain’s biggest bank will rise 20% to $24.7bn (£14.8bn) from $20.6bn in 2012, according to analysts’ consensus forecasts.

The bank is expected to say its increased share of UK mortgage lending for the year to the end of December 2013– up from 2.5pc in 2007 to 12pc currently – helped profits beat the record $24.2bn it made in 2007, after demand for mortgages increased strongly over 2013.

Companies in Europe reporting results today:

EARNINGS All times CET

• HSBC (HSBA LN) 9:15am FY

• PostNL (PNL NA) 7:30am, FY

• Kingspan (KSP ID) 8am, FY

• Hiscox (HSX LN) 8am, FY

• Bunzl (BNZL LN) 8am, FY

• Assoc British Foods (ABF LN) 8am, 2Q sales

Good day and happy trading!

The Calamatta Cuschieri Traders Blog is available daily on CC WebTrader. Other market coverage including coverage of the International Bond Markets is also available.

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