Market snapshot: weaker data could threaten record highs

A dip in US consumer sentiment and weaker economic data from China are the main things concerning the markets today.

A weak consumer sentiment reading in the US was not enough to derail the market’s general march onwards to record highs.

A stellar quarterly reporting season has been the main driver of sentiment of late, underpinned by the ongoing surge in liquidity from fiscal and monetary stimulus.

Disney (NYSE:DIS) was the latest company to beat expectations, with the theme parks business returning to profit as the Disney Plus streaming service maintained its strong growth in subscriber numbers.

This was enough to offset a plunge in consumer sentiment for August, a central indicator of the US economy, on the back of inflation and persistent health and variant concerns. Fed comments accompanying the latest minutes follow in the next few days, with investors focused on any further clues as to the timeline for the tapering of stimulus, even though interest rate rises appear to remain some way off.

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Both the Dow Jones and the S&P 500 inched to new record closing highs, now ahead by 16% and 19% respectively in the year to date, with the Nasdaq also up by 15%.

In the UK, the more domestically focused FTSE 250 continues to be the star of the show, with the index having risen by 15.7% in the year to date.

However, weaker economic data emanating from China has spoiled the mood, with lower readings on retail sales and industrial production raising questions on whether the recovery momentum can be maintained. In addition, there remain some health issues in Asia generally, while geopolitical concerns have also surfaced following the developments in Afghanistan and the implications for the future of the region.

The FTSE 100 is currently up by 11% in the year to date, with generally recovering economic data, some M&A activity and pleasing corporate earnings having added to the mix. Even so, the latest challenges of geopolitical and economic recovery concerns will be pondered globally over the coming sessions, with the FTSE 100 potentially in the firing line given the largely cyclical nature of its constituents.