Yesterday, US data dented the mood: initial jobless claims missed expectations, the PCE reading showed an increase of 4.2% on an annual basis in July, compared with 4.1% the previous month, although this was in line with expectations. Personal spending rose more than expected. While inflation progressed in Spain, Germany and France, the core inflation reading for the Eurozone fell from 5.5% in July to 5.3% in August.

In China, the central bank reduced the foreign currency reserve requirement ratio for financial institutions to support the yuan, while the government introduced measures to allow the country's major cities to ease payment conditions for property buyers. At the same time, banks responded to the authorities' call by lowering rates on existing mortgages. The surprise of the day was the Chinese manufacturing PMI calculated by Caixin, which came out stronger than expected in August, and even entered the expansion zone at 51 points.

Good news from China lifted the FTSE 100 this morning. It was up 0.4% at 9.30am. Oil and miners outperformed.

Among stocks, Insurer Direct Line declined 1.6% after the FCA said the insurer will review overcharging customers about 30 million pounds for policy renewals.

Fashion retailer Superdry, which was late to post its results, unveiled an adjusted pretax loss of 21.7 million pounds for the year ended April 29, 2023, compared with a profit of 21.6 million pounds.

Things to read today:

China’s Economy Shows Fresh Weakness in Factories, Housing and Consumer Spending (WSJ)  

Why Putin is Worried About Russia’s Volatile Ruble (Bloomberg)