European equities rebound on solid US data

Friday, April 04, 2014

European equity markets rebounded strongly today, as solid US employment data increased risk appetite. The report from the US Labor Department showed payrolls increase by 192,000 in the US economy in March, following a 197,000 rise in February. The US unemployment held steady at 6.7% in March, providing further support to the US dollar which continued its recent strong uptrend against the euro.

 

The CAC, DAX, IBEX and the London equity index gained between 0.7% and 0.88%, while the euro remained under pressure, trading around 1.37 against the US dollar.  

 

In London, energy stocks posted strong gains following a strong rebound in crude oil prices as Brent futures front month climbed toward $107 per barrel. BP and Royal Dutch Shell gained 1.01% and 0.73%, respectively. Mining stocks also rebounded following stronger base metals prices. Anglo American, Fresnillo, Antofagasta and Rio Tinto rose between 1.95% and 3.2%.

Banks and insurance companies also posted strong gains as risk appetite increased. RSA, Legal and General and Old Mutual rose more than 2%, while Lloyds and Barclays added 1.68% and 1.66%, respectively.

 

It has been a fairly volatile week, which started with fairly disappointing PMI economic data from the US, Asia and Eurozone. However, market sentiment has improved following the recent solid US employment figures and the strengthening US dollar.

Next week sees the release of German industrial output as well as Eurozone’s sentiment index data, which could provide further momentum to the equity markets.

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