European equities pull back off multi-year highs

Monday, March 02, 2015

European equity indices pulled back from multi-year highs as the bullish undertones from the Asian session failed to spill-over to today’s trading session. After Chinese policymakers cut interest rates again over the weekend, cutting the 1 year lending rate from 5.6% to 5.35% in an effort to offer markets further support, benchmark indices across Asia were lifted higher, gaining further support from a better than expected official manufacturing PMI reading. However, the positive mood had hardly any effect on European stocks as investors took advantage of a profit taking opportunity.

Better than expected macroeconomic data failed to offer some upside potential to European markets today with London’s blue chip index trading tentatively lower even after the UK manufacturing PMI reading rallied to a seven month high in February as the Markit reading rose to 54.1 against expectations of 53.3. Germany’s Markit manufacturing PMI reading also surprised on the upside, rising to 51.1 in February against expectations it would stay flat m/m at 50.9, adding further credence to the outlook for Europe as it starts 2015 on a stronger footing. However, the stronger data failed to materialise into additional gains in stocks today with most major indices ending the session marginally lower as investors opted to take profits.

Over in the US, both the S&P 500 and DJIA were trading slightly higher despite data illustrating US consumer spending fell for a second consecutive month in January as lower oil prices continued to present considerable headwinds. Despite personal income in January holding stable month-on-month at 0.3% against expectations of a 0.4% increase, a better than expected Markit manufacturing PMI reading which increased to 55.1 in February from an initial reading of 54.3 prompted further buying across benchmark indices. The dollar index was seemingly on track to close higher for the third straight day as it extended gains briefly towards 95.505 after intraday dips early on saw the greenback fall towards 95.060 against a basket of major currencies early on.   

UK manufacturing activity rallies to seven month high

MPMIGBMA Index Markit CIPS UK M 2015 03 02 14 05 38

 US manufacturing PMI bounces back

MPMIUSMA Index Markit US Manufa 2015 03 02 15 26 34

Dollar index extends gains

DXY Curncy DOLLAR INDEX SPOT 2015 03 02 15 34 36

Topics: Equities, PMI, DXY
More from: Kash Kamal