5-day winning streak ends for the FTSE

<p>European markets finished their five-day winning streak today as weak Chinese data and concerns over the eurozone debt crisis begin to re emerge, causing traders […]</p>

European markets finished their five-day winning streak today as weak Chinese data and concerns over the eurozone debt crisis begin to re emerge, causing traders to start booking out profits.

Chinese trade data set the scene for the trading day, coming in dramatically worse than expected. Exports grew a mere 1% against expectations of a growth of 8.6%, whilst import also grew less than expected at 4.7%. These are the worst export growth numbers since November 2009 and highlight how susceptible the Chinese economy is to external risk.

China, the largest metal consumer, holds the reins over the global mining sector. Any suspected or actual slowdown in the Chinese economy is cause for concern for the miners. Consequently this sector put pressure on the UK index, resulting in it closing down 4 points at 5847.

Barclays closed up 2.4%, topping the FTSE leader board after announcing that David Walker, an industry veteran and former Bank of England official, will take over from Marcus Agius as Chairman. Barclay’s shares have recovered over 20% in the last few weeks, having hit a Libor scandal induced low on 26 July.

However in general the markets had rallied considerably since Thursday 26th July, the date when European Central Bank President Mario Draghi said he would do “whatever it takes” to protect the euro from the region’s debt crisis. However traders have started to realise that this may not be the case, especially if there is continued failure to agree on what measures to take.

Furthermore increasingly gloomy data released from Europe’s largest economy has shown a clear slowdown in manufacturing orders, industrial output, imports and exports. Germany is set to announce its GDP growth figures next Tuesday, and although it is expected to come in at 0.2% so moderate growth; it seems unlikely that this will continue in the third quarter.

Any slowdown in the powerhouse of Europe will mean things will go downhill from here, especially given the figures from China this morning. Confidence will ebb away and the risk off trade will be the direction again for portfolios. With this in mind traders will again be hoping and searching for indications of further stimulus here, in the US or in China.

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