Draghi’s comments add further pressure to European equities

Friday, October 24, 2014

European equity markets extended losses in the last session of the week as risk appetite was limited following renewed concerns about Eurozone’s economic stability and future prospects. The CAC, DAX, AEX and the London equity benchmark retreated between 0.5% and 0.75%, while the euro consolidated around 1.26 against the US dollar. 

EURUSD Spot

 XAG Curncy (Silver Spot  $_Oz )   2014-10-24 17-00-35

European Central Bank President Mario Draghi warned EU leaders today that “joint effort” is needed in order to avoid “a relapse into recession” and he called for stimulus. An ECB spokesman reported that the central bank has previously announced that it would be ready to adopt unconventional measures if necessary in order to boost the European economies. Earlier today, the ECB reported that about 25 European banks are set to fail its stress tests. 

On the macroeconomic front, the UK GDP preliminary grew 0.7% in Q3 2014 compared to 0.9% in Q2 2014, showing signs of slowdown despite verifying the seventh end-on-end quarter of UK GDP growth. In the US, new home sales increased 0.2% in September compared to a 18.0% rise in August, beating analysts’ expectations.

UK GDP q/q Chart

UKGRABIQ Index (UK GDP Chained G 2014-10-24 16-59-29

 

Precious metal prices remained under further pressure today, as gold, silver and platinum extended recent declines. Gold slid lower towards $1220/ounce, while silver held just above the $17.00 area. Randgold, Fresnillo, Glencore and Anglo American declined in the London equity market between 1.3% and 2.6%.

XAG - Silver Spot

XAG Curncy (Silver Spot  $_Oz )   2014-10-24 17-00-35 

Travel stocks posted heavy losses as investors remained cautious about the Ebola virus. Intercontinental hotels, TUI travel, Compass Group and Carnival all declined between 0.3% and 1.8%. On the other hand, Shire surged 4.1% after it raised its profit forecast for 2014.   

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