It has been a fairly volatile trading session for the equity and commodity markets, which are struggling to find direction. In addition, the strong upside rally of the US dollar has added further pressure to the markets as the USD index hit a 9-year high today testing 91.0 against a basket of currencies. Furthermore, the euro remained under heavy pressure, extending losses to retest 1.20 against the dollar amid renewed worries regarding Eurozone’s economic prospects in 2015.
European equity markets erased earlier gains and slid lower during the first trading session of 2015. The CAC, DAX and London equity benchmark index retreated between 0.35% and 0.55%, while the IBEX and the Italian stock market remained in positive territory.
In London, banks remained under pressure. RBS dragged the UK banking sector lower after retreating over 1.6%, while Barclays and Standard Chartered posted renewed losses around 0.3%. However, Lloyds and HSBC managed to hold in positive territory.
We received fairly disappointing manufacturing PMI data from the US, Asia, UK and Eurozone, creating renewed concerns about a slowdown of the manufacturing sector worldwide. In the US, Markit Manufacturing PMI was reported at 53.9 in December against analysts’ expectations of 54.0. US construction spending declined unexpectedly 0.3% in November versus analysts’ estimates of a 0.4% rise, while ISM manufacturing dropped to 55.5 in December from 58.7 in November.
Crude oil prices fluctuated strongly during the first trading session of the year. Brent front month futures erased early gains and slid lower towards $56 per barrel, while WTI futures breached below $53/barrel. Energy stocks retreated sharply, with Tullow Oil falling 1%, while BG Group and BP declined 0.75% and 0.55%, respectively.