London pre-open: Weak Chinese data and US earnings set to weigh

24th Jul 2015 08:26

(ShareCast News) - Some follow-through selling in the commodities space on the back of weak Chinese manufacturing sector figures and a lower overnight on Wall Street - after poor earnings reports from the likes of Caterpillar, Freeport-McMoran and Dow Chemical - were expected to weigh on share prices at the start of trading.The FTSE 100 was being called to start the day lower by between 28 and 29 points from Thursday's close.As of 07:43 the Shanghai Stock Exchange's Composite Index was 0.20% higher to 4,132.023 points and August gold futures on COMEX were off by 0.92% to $1,084 per ounce.Chinese data overshoots to downside by a wide marginThe Markit China manufacturing sector purchasing managers' index for July dropped to a reading of 48.2 - a 15-month low - following a print of 49.4 for June.That was far below the consensus forecast for a reading of 49.7."A lot of focus has been put on oil and gold prices but a better barometer of the global economy is the industrial metal copper, which is also collapsing. Are we heading for a global recession triggered by China? Well at the moment it's far too early to tell but that fact that it's the new hot topic of debate replacing Greece should surely get warning lights flashing," said Jonathan Sudaria, Night Dealer at London Capital Group, in a research note e-mailed to clients.Economists were mixed in their reactions to the Chinese numbers."Despite the much weaker-than-expected PMI reading, we remain relatively sanguine about the near-term outlook. We think that recent policy easing has yet to fully feed through into stronger economic activity and expect policy-makers to respond to signs of weakness, " wrote Julian Evans Pritchard at Capital Economics.Oxford Economics on the other hand had this to say: "Today's survey data will add to heightened concerns over the extent of the current growth slowdown. We expect additional policy action in the months ahead [...] However, thanks to an on-going appreciation in China's real effective exchange rate, monetary policy conditions will remain tight. This could see the authorities turning to a more direct approach such as fiscal spending, although this in itself has its own risks."Acting as a backdrop, Deutsche Bank analysts reiterated their call for the single currency to drop back to parity versus the US Greenback by year-end.Vodafone waxes optimistic after latest quarterly numbersVodafone said it has made a good start to the year, with organic service revenue up 0.8% in the quarter ended 30 June as the European businesses return to growth and customer demand for 4G and data takes off. Service revenue is the money the mobile phone company gets from customers' plans and traffic on its network. The figures came in better than expected and ahead of the 0.1% increase in the fourth quarter.Hammerson posted a total return on property investment of 5.7% in its first half trading update, 1% ahead of estimates. The property owner said its outperformance was principally due to growth in its premium outlets and developments.