European equities post fresh losses

Tuesday, May 20, 2014

European equity markets posted fresh losses in today’s session, as risk appetite was limited. The CAC and DAX retreated by 0.3% and 0.1%, while London’s equity benchmark index fell more than 0.57%, dragged lower by Vodafone and the UK retail stocks.  

On the macroeconomic front, UK inflation rose to 1.8% y/y in April compared to 1.72% in March, missing analysts’ expectations of 1.7%. Furthermore, German producer prices fell slightly by 0.1% in April.

UK Inflation y/y

UKRPCJYR Index (UK CPI EU Harmon 2014-05-20 17-05-53

The euro came under renewed pressure, trading below the 1.37 level against the US dollar, while the sterling edged higher trading above 1.684 against the USD.  

GBP Spot

GBP Curncy (British Pound Spot )  2014-05-20 17-06-26

 

In London, Vodafone retreated by 5.75% in today’s trading session after reporting its core earnings would decline in 2015 due to increasing investment spending needed for its main business. Marks and Spencer declined by 1.1% after reporting severe delays with the launch of the company’s new website, which could affect its online operations and business. Tesco and Morrison Supermarkets also retreated by 1.9% and 2.1%, respectively.

Tomorrow, market participants will be watching for the release of the UK retail sales and Eurozone’s current accounts and consumer confidence data. It has been a fairly quiet week so far on the macroeconomic front. We expect further sideways trading activity in the European equity markets in the following trading sessions, as risk appetite remains limited. 

 

More from: Myrto Sokou