Consolidation in equity markets on lack of drivers

Tuesday, December 10, 2013

Figures published by the National Institute of Economic and Social Research (NIESR) estimated 0.8% growth in UK GDP during the three months to November, a slight increase from the three months to October figure of 0.7%.  Industrial production figures as well as the RICS house price index came in largely in line with expectations, highlighting the steady albeit slow improvement in economic conditions. Despite the generally unsurprising data, European equity markets drifted lower today as investor concerns regarding QE eroded support and prompted a bout of profit taking as indices across Europe and the US consolidated. London’s blue chip index struggled with direction early on in the session, pushing above 6,570 throughout the morning before breaching intermediate support levels all the way to 6,520. At the time of writing the index was trading 0.3% lower.

Wider European markets also struggled with the lack of economic catalysts, with both the DAX and CAC trading down 0.6% and 0.8% respectively at the time of writing. Markets were knocked by fresh concerns regarding the timing of stimulus cuts with both the S&P 500 and DJIA paring recent gains as they opened on the back foot. Attention has now switched to the FOMC meeting scheduled next week, with jittery investors opting to limit exposure and take profits ahead of any potential announcement.

The euro climbed to a six week high against the dollar, rallying for a sixth consecutive session towards 1.3800 after last week’s interest rate decision from the ECB and subsequent comments by Mario Draghi failed to reassure investors. For now it seems that attention is firmly fixed on both the FOMC meeting next week and congressional budget talks, which once again threaten to derail the recent rally in risk assets. 

S&P 500 opens on the back foot, has since recovered but struggles to break higher

SPX Index SP 500 Index 2013 12 10 16 01 15

EUR climbs to a six week high against the dollar

EUR Curncy Euro Spot 2013 12 10 15 40 29

Topics: GDP, SP 500, US Fed, ECB, FTSE100, EUR
More from: Kash Kamal