A quiet day for the European equity markets

Wednesday, January 22, 2014

It has been another quiet day for the European equity markets, which consolidated within the recent range, struggling for some direction.  Due to the absence of major macroeconomic data and significant currency movements, the equity markets continue to trade range-bound, with CAC, DAX and the London benchmark index closing fairly unchanged on the day.

On the macroeconomic front, the UK economic figures were the only noticeable indicators today but failed to provide any strong momentum to the UK equity indices. The ILO unemployment rate fell to 7.1% in November, beating expectations of 7.3%, while the Bank of England reported that it sees no immediate need to raise interest rates even if 7% is reached soon. Please note that both the bond purchase vote and the interest rate vote were 9-0 against.  

In London, Sage Group surged by 3.34% following a strong earnings report that confirmed its yearly targets. On the other hand, banks and financial stocks were under pressure as risk appetite was limited. RBS retreated sharply by 3.06% following a downgrade from UBS from “neutral” to “sell”. Barclays, HSBC and Lloyds also posted losses, closing lower between 0.74% and 0.86%.

Base metals prices ended slightly lower on the day, with the exception of Nickel, while trading volumes have remained fairly low, in the last few trading sessions. Gold and silver have been trading sideways today, with silver remaining below $20.0 area while Gold has been consolidating around $1240.

Tomorrow, it is a fairly busy day on the global macroeconomic front that could provide some momentum to equity and commodity markets. In Eurozone, the release of the Markit Flash manufacturing and services PMI data as well as Eurozone’s consumer confidence could give some direction to the euro. In the US,  the releases of the weekly jobless claims, Markit manufacturing PMI, monthly home prices and existing home sales could also provide a better outlook about the US employment conditions and the US housing market.


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