Japan´s GDP contracted at a 1.6 per cent annualised rate in the third quarter, a far weaker outcome than the 2.2% rate of expansion which analysts had expected. Hence, the arhipelago´s economy has now again entered into “technical recession”.

Possibly lessening the blow, the country´s Economy Minister, Akira Amari, said there is now “a high chance” of a stimulus package being needed.

“The trading week got off to a woeful start in Asia overnight as news that Japan contracted by 0.4 per cent in the third quarter, leaving the country in a technical recession, drove the Nikkei to near 3 per cent losses and raised serious questions about the planned sales tax hike next year,” Alpari UK market analyst Craig Erlam remarked.

In parallel, new local currency credits in China totalled 548bn yuan (60bn pounds) in October, according to figures from the China Banking Regulatory Commission published on 15 November, less than the 626.4bn yuan which markets had been anticipating.

To take note, Bloomberg reported that Communist Party leaders have discussed reducing the country´s target for economic growth next year.

In parallel, first thing on Monday morning US drugs giant Pfizer warned on its full-year profits, which may be weighing on the likes of AstraZeneca. The company now sees full-year adjusted earnings per share (EPS) coming at between $1.40 to $1.49, versus the between $1.50 and $1.59 previously foreseen.

Monday’s session was due to be a quiet one, although the release of Eurozone trade balance figures and US October industrial production data were both scheduled for later in the day.

European Central Bank (ECB) President Mario Draghi was also due to testify on monetary policy before the Committee on Economic and Monetary Affairs in Brussels.

“This could be quite a big market event today as not only is Draghi likely to be heavily questioned on the ECB’s efforts to avoid deflation thus far, which are showing little sign of working, he’s also likely to be pressed on further attempts to lift its balance sheet to €2trn,” continued Erlam.

Light day for corporate news

In company news, at actual exchange rates industrial materials engineer Bodycote saw group revenues drop by 3.9 per cent in the four months to 31 October on the back of weakness at its aerospace and defence arms, alongside certain weakness in its automotive business in Western Europe. At actual exchange rates the group´s performance was significantly better, with group revenues up 2.9 per cent over the same period of 2013, in-line with management´s expectations.

Outsourcing group MITIE saw headline revenue growth of 4.8 per cent, ahead of the prior year´s £1,095m (3.9 per cent organic), together with a 3 per cent rise in operating profts to £64.2m. The dividend was increased by 6.1 per cent (5.2p). Net debt at 30 September 2014 stood at £233.8m, while headline cash conversion was at 80.3 per cent, above its target of 80 per cent, broker Investec pointed out.

Reckitt Benckiser Group (RB) unveiled the detailed proposed timetable for the demerger of its RB Pharmaceuticals business, which will have a separate UK listing under the name of Indivior. “The board of RB considers that the demerger is in the best interests of both RB and Indivior and will result in a stronger future for both,” the group said.

Mining giant Rio Tinto and China’s Sinosteel Corporation announced plans to press ahead with talks for a second extension to the Channar Mining iron ore joint venture in Western Australia’s Pilbara region. The original Channar joint venture was signed in 1987 to produce 200m tonnes of iron ore and was extended in 2010 to produce a further 50m tonnes of iron ore.

Talk Talk has announced a new multi-year commercial agreement with Telefónica UK, under which Telefónica UK will provide TalkTalk with access to its 2G, 3G and 4G services in the UK. “This is a significant commercial relationship for us as we build upon our success to date in mobile,” the FTSE 250 group said.

Source: ShareCast