European equity markets experienced some tempering to the recent upward rally today as gains across benchmark indices were comparatively modest compared to recent sessions. Market participants approached risk assets with caution ahead of tomorrow’s OPEC meeting, however, investors in Germany’s DAX saw optimism spill over from yesterday’s positive data releases as the index held on track to close higher for the tenth straight session.
Wider European stock indices traded marginally either side of their opening levels with support at current levels holding firm on a fresh plan by the European Commission to boost growth in the region. EC president, Jean-Claude Juncker outlined today a plan to see 300bn euros of mostly private investment in the European Union, stressing structural reforms and debt management for member nations would be needed to increase investment, jobs and growth in the region. However, critics of his plans will be quick to jump on the fact that the investment lacks any large scale public spending which could prolong the investment timeframe.
The euro struggled to hold onto yesterday’s gains against the dollar early on in today’s session, with intraday swings either side testing resistance towards 1.2500 and support at yesterday’s opening level around 1.2400. Exporters in the region have benefited from the recent weaker currency having lost almost 10.0% year-to-date but recent activity remains within the month’s trading range with do not expect any significant breakout ahead of next week’s ECB meeting and rate decision which will hopefully provide further insight into Draghi’s plans to reverse Europe’s fortunes.
The single currency managed to recover early gains above 1.2500 towards the end of the European session after a disappointing string of US economic data. Both personal income and personal spending growth in October came in below expectations of 0.4% and 0.3%, growing by 0.2% apiece while a significant increase in initial weekly jobless claims, rising 21,000 w/w to 313K last week. The University of Michigan confidence index also came in below expectations with the final reading for November falling to 88.8 against expectations of 90.0. The weaker than expected data saw US equity benchmarks slow their otherwise steady march higher with the S&P 500 and DJIA both trading either side of their opening levels early on.