With the UK stock market getting trashed to the tune of 9% in the opening few weeks of the new year, european markets upon opening should follow Asia, where the selling has stopped and small gains have been seen. A market that has lost 20% of its value from a peak level, is technically considered to be in a bear market but, with almost half of that occurring in thin start of year markets, you need more time before flagging that negative label up.   

This is one of the largest opening losses ever seen in the same period in the UK but not caused by UK economic data. The continuing collapse in the price of oil and concern over really poor manufacturing data from China, have given traders an easy direction - down, and then the herd instinct takes over. The old saying "if you are going to panic, panic first" has been driving the markets lower.

Unlike China, there is good news from the UK in the manufacturing area, with motor manufacturing  hitting a level not seen for ten years. UK inflation is a tad higher at 0.2% against a Bank of England target level of 2%, so no panic there.

 UK Unemployment is now down to 5.1% of the available workforce, despite our steel industry having a very bad time of it due to lower pricing and shedding jobs, also hit by the lower Chinese manufacturing data and a forecast for a lower global requirement for steel. However, a further 99,000 people have been removed from the unemployment list, now standing at 1.68 million.

What is happening at the moment in world markets is a good example of how they are dependent on each other. China is now the second largest economy in the world behind the US and if they are looking like manufacturing less, they will not be buying as much steel as they have in recent years. The steel price drops on less demand and producers need to adjust their production levels downwards and let staff go. This is the background for the staff cuts in the UK steel industry at the moment, despite the UK motor industry looking very positive.