European equities finish slightly lower

Tuesday, February 25, 2014

European equity markets came under pressure today with the DAX, CAC and the London benchmark index retreating slightly lower due to some profit taking as the fairly mixed US economic data weighed on market sentiment and prompted investors to lock in recent gains.

The London index fell by 0.5%, while the DAX index managed to end fairly flat on the day following robust GDP data that showed Germany’s economy grew by 0.4% in Q4 2013, in line with analysts’ estimates.

In the US, house prices increased by 0.8% in December, beating analysts’ expectations. However, consumer confidence fell to 78.1 in February against expectations of 80.0, while the Richmond Fed manufacturing index fell to -6 in February, compared to +14 in January, missing analysts’ estimates.

In London, mining stocks extended declines to show their biggest one-day fall in six months amid renewed concerns that possible slower growth in the Chinese economy and lending curbs in the Chinese property market could drive base metals demand lower in the short-term. Rio Tinto, Anglo American, Antofagasta and BHP Billiton fell sharply between 1.7% and 2.7%. LME Copper retreated sharply to retest the $7,050 level.

On the other side, gold continued its strong rally, extending gains for a twelve consecutive session and breached above $1,340 level.

We have experienced fairly strong gains across the US and European equity markets in the last few trading sessions, verifying the strong uptrend in the equity markets. It is likely to expect further consolidation in the coming sessions as investors try to digest the recent modest Chinese economic data and news, which weigh on market sentiment and partially limits risk appetite.

Tomorrow, the release of the UK GDP data as well as German consumer sentiment could draw the markets’ attention.

German GDP 15-year Chart

Germany GDP 2014-02-25

Gold Spot Daily Chart - 6 Months 

XAU Curncy 14-02-25

 

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