A strong rebound for global equity markets after the heavy sell-off

Tuesday, January 28, 2014

European equity markets rebounded on Tuesday, following the recent sharp sell-off in the equity markets, with CAC, DAC, IBEX and the London equity benchmark index gaining between 0.33% and 1.24%.

The UK’s economy grew in 2013 at its fastest rate in six years, showing a 1.9% increase in 2013 according to the Office for National Statistics (ONS),  while its Q4 2013 growth slowed slightly to 0.7%, in line with analysts’ estimates. The main sectors that posted strong signs of growth and improvement were construction as well as oil and gas industries. The optimistic data raised renewed concerns about how long the Bank of England will hold interest rates at a record low level. 

The US economic data was fairly mixed after showing a sharp decline of 4.3% in durable goods in December, while building permits fell by 2.6% to 991,000 on the same month. However, consumer confidence increased to 80.7 in January, beating expectations, while the Richmond Fed business index fell to 12 in January compared to 13 in December.

In London, mining and industrial stocks as well as banks were the main support of the London equity index. Johnson Matthey, Antofagasta, Rio Tinto and Anglo American climbed higher between 1.82% and 2.77%. In the UK banking sector, RBS and Lloyds gained 3.52% and 3.05%, respectively, as risk appetite rebounded.

The stronger US dollar limited strong gains in the commodity markets with the USD index holding strongly above 80.0 area.

Tomorrow, investors will be keeping an eye on the release of the release of the German GfK consumer sentiment as well as UK Nationwide house prices, while in the afternoon the main focus will switch to the release of the US Federal Reserve rate decision that will set the tone for the trading session. 

More from: Myrto Sokou