European equity markets reversed from recent gains and slid lower today, as investors were prompted into some profit taking. We received fairly mixed economic data from China, the US and Eurozone, which failed to provide a clear direction to the equity markets. The CAC, DAX, IBEX and the London benchmark index retreated slightly between 0.15% and 0.6%, tracking losses in the US equity markets.
The euro has continued its strong uptrend trading above 1.38 against the US dollar, supported by robust European PMI manufacturing data. Germany’s Markit Services PMI surged to 55 in April compared to 53 in March, while the manufacturing PMI rose to 54.2, beating analysts’ expectations. The Eurozone’s manufacturing PMI increased slightly to 53.3 in April, compared to 53.0 in March.
In the US, the Markit manufacturing PMI data missed analysts’ estimates, while new home sales fell by 14.5% m/m in March against expectations of a 2.3% increase.
Furthermore, China’s manufacturing sector shrank for a fourth consecutive month in April as the country’s manufacturing PMI flash was reported at 48.3 in April, verifying concerns about a slowdown in the Chinese economy.
Tomorrow, the main focus will turn to the weekly US jobless claims data as well as durable goods and build permits, while the Ifo economic survey could provide further signs about the German economic conditions.
We have seen a strong rally across the European equity markets, based on the recent solid European economic data. The euro has remained fairly strong, verifying signs of strong improvement across the Eurozone.