09:30 AM

Market Comment+quick comment to Sainsburys.

Good Morning!

European equities are trading little changed this morning managing to hold on to yesterday's gains as markets in Asia and the US were able to follow Europe's lead and moved higher overnight. There is quite a bit of data out today in Europe and the US. Expectations are not necessarily high that figures released this morning like Euro-zone unemployment data and retail sales and German factory orders will be able to move markets in a major way.

Mainly because they are expected to show an unchanged picture compared to the last few months, with the economy in Europe as a whole continuing to recover but at a very moderate pace and German factory orders are likely to confirm that Europe's biggest economy has ended the year on a positive note. Later in the day traders will turn their attention to the US where the ADP employment report is being released, providing traders with a bit of a preview and possibly an indication on how Friday's release of the important US Non-Farm payroll figures might turn out.

Finally in the evening FOMC minutes will be released. Today's release carries more than usual importance as the Fed started tapering in December. It will be interesting to see how broad the consensus was in regard to 'tapering' as a whole and also concerning the amount of 10 Billion USd by which the Fed is planning to reduce their monthly bond purchases going forward. Overall market sentiment seems to have turned a bit more neutral in recent days after the dismal start to the New Year, however it needs to be seen if the rebound in the past few days will indeed have legs as there are plenty of data still to be released which might prevent traders and investors from jumping fully into the markets just yet.

Also although markets mainly having ignored it so far but the situation in China is still cause for concern where the economy seems to be slowing more than expected, plagued by insufficient liquidity and high debt.

Specific to the UK, traders are eagerly awaiting Christmas sales data for individual supermarket chains. Sainsbury's kicked off today with much better than expected sales allaying fears that slow wage growth and sharply rising costs of living expenditures like rocketing electricity and gas prices might have lead to sharp cutbacks by consumers. Today's figures are followed by Tesco's data tomorrow. It will be interesting to see if Tesco can similarly to Sainsbury's and Waitrose beat expectations. However with Tesco and also Morrisons things might turn out to be a bit different as both are competing more fiercely with discounters like Aldi and Lidl while at the same time Sainsburys also has run major discount promotions which might have lured customers away from Tesco.

Thank you.

Kind regards

Markus Huber | Senior Sales-Trader/Senior Analyst
Peregrine & Black
www.peregrineblack.com

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