European equities extended gains following the recent euphoria

Wednesday, February 12, 2014

European equity markets have continued to extend gains on Wednesday, following optimism generated from the speech by new US Federal Reserve Chair, Janet Yellen. Robust Chinese imports/exports data also improved market sentiment, boosting most equity and commodity markets. CAC and DAX gained by 0.49% and 0.65%, respectively, while the London equity benchmark erased earlier gains and ended fairly flat on the day.

On the macroeconomic front, Chinese exports jumped by 10.6% in January, while imports also surged by 10%, beating analysts’ expectations. However, the Eurozone’s industrial production fell by 0.7% in December, far below analysts’ estimates. The euro came under pressure following the fairly disappointing European economic data, trading below the 1.36 level against the US dollar.

In London, gains in mining stocks and consumer services have been offset by heavy losses in technology and energy sectors. Antofagasta, Glencore and Rio Tinto continued their upside momentum, gaining between 1.3% and 2.66%. Tullow Oil retreated sharply by 6.3% after reporting fairly disappointing earnings results, which missed expectations. Royal Dutch Shell and BP also followed the downtrend, declining by 1.38% and 0.92%, respectively.

The main focus will turn to the US Fed budget details later this afternoon, which could provide a better insight about the current US economic sentiment and future prospects. Tomorrow, the release of the weekly US jobless claims and retail sales data for January will draw investors’ attention. In Europe, the release of the UK RICS housing survey results as well as German CPI inflation figures could provide a better outlook about the current economic conditions.  



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