OVERNIGHT MARKETS ROUND UP – 17/01/14

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In another blow to the world’s second largest economy, Chinese factory output and investment growth probably slowed in December with investors now fearing that the recovery is losing steam. Additionally, Chinese industrial-production gains slowed to a five-month low of 9.8 percent and gross domestic product grew 7.6 percent from a year earlier in the October-December period.

One major talking point this week has been dollar strength with the currency outperforming all of its major peers. In-fact, we expect to see the dollar register its most significant gains in more than 2 months this week on the back of encouraging U.S data hinting at a sustained economic recovery. 

U.S indices have swung between gains and losses throughout the week as better-than-forecast retail sales and corporate merger activity underlined the strength in the economy, notably the number of Americans filing new claims for unemployment benefits fell for a second week last week. However, the SPX 500 fell 1.3% during yesterday’s session, the most since November, as investors weigh up further upside potential in equities after a 30 percent rally last year sent headline US and European indices to all-time highs. 

On a note of caution for bullish traders, the SPX 500’s retreat from all-time highs yesterday has been in part driven by disappointing earnings from banks including Goldman Sachs and Citigroup Inc, though some noted that the broader impact was limited.

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