European markets look to follow US gains, casting aside Chinese deflation concerns

• European markets higher as focus shifts to the ECB
• Chinese inflation falls to lowest level since 2009
• US markets looking for earnings boost as S&P 500 reaches 5000 mark

A strong start for European indices, with equities seeking to follow their US counterparts higher. The DAX looks to continue its period of strength, with investors hoping to see another push into fresh highs after the index reached fresh levels on the expectation of a swift pivot from the ECB despite commentary indicating a more patient approach. The ECB come back into focus today, with appearances from members Vujcic, Wunsch and Lane coming on a day that also seen the bank release their latest Economic Bulletin.

The Chinese economy once again brought cause for concern overnight, with latest CPI figure of -0.8% representing the lowest rate since 2009. As the Chinese seek to reignite their economy, the continued decline in prices tells us a lot about consumer demand and economic activity in the region. However, it is worthwhile noting that the monthly figure of 0.3% actually represents the second consecutive positive figure, providing a glimmer of hope to some. We also saw yet another negative PPI reading, with factory prices heavily down over the past year. For the rest of the world this could yet bring benefits in driving down disinflation elsewhere, as the price of Chinese exports globally remain relatively depressed.

US markets remain in the limelight for equity bulls, with the S&P 500 nudging up against the 5000 mark for the first time on record. Earnings season continues to rumble on, with Walt Disney (6%) and Arm Holdings (21%) expected to provide fuel for US equity markets today, following bumper reports after the bell yesterday. Today sees markets turn to the US jobs market once again, with unemployment claims expected to settle down after a rise over recent weeks. Coming off the back of Friday’s bumper payrolls report, the US jobs picture remains solid as things stand. However, we have seen that payrolls picture enhanced by a huge amount of people taking up second jobs in a bid to adapt to the newly inflated cost of living. With that in mind, markets will be watching closely for any further gains to the unemployment claims figure as a sign of underlying pressure building in the jobs market.