European equities extend losses due to profit taking

Wednesday, February 26, 2014

European equity markets extended their losses today as investors were prompted into some further profit taking to get advantage of the recent rallies. CAC, DAX, IBEX and London retreated between 0.18% and 0.46%.

On the macroeconomic front, UK GDP data was in-line with analysts’ expectation after showing the UK economy grew by 0.7% in Q4 2013 in line with the previous quarter.

In the US, the bullish housing data boosted market sentiment and drove US equity markets higher. New home sales surged by 9.6% in January (against expectations for a 3.4% drop), reaching the highest level in five years verifying a strong economic recovery in the US housing market. The data surprised investors and pushed the US dollar higher against the euro, and the USD index climbed toward 80.5.

In London, heavy losses in mining stocks and financials helped drag the leading index lower. Base metals prices slid lower in today’s session as the stronger US dollar weighed on the market. Precious metals also reversed and slid lower, with gold trading slightly lower around the $1,330 area. Thus, Randgold and Fresnillo posted heavy losses and retreated by 1.56% and 1.03%, while Rio Tinto, Mondi, BHP Billiton, Glencore and Anglo American also fell sharply between 0.45% and 1.24%.

Tomorrow, the release of the German import/export prices, CPI data as well as unemployment figures will draw markets’ attention. In Eurozone, consumer confidence figures could also provide some direction to the euro. In the afternoon, the markets’ focus will turn to the release of the US weekly jobless claims as well as KC Fed manufacturing index.

S&P 500 Index Daily Chart

SPX Index (S&P 500 Index )  2014-02-26 17-04-40

 

USD Index Daily Chart 6-months

DXY Curncy (DOLLAR INDEX SPOT)  2014-02-26 17-06-17

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