Eurozone stocks drop on short term profit taking

Tuesday, April 14, 2015

After extending back towards multi-year highs since the start of the month it seems eurozone investors have lost their appetite for higher levels with major equity benchmark indices in the region experiencing firm selling pressure throughout the session. Having rallied over 26% and 24% respectively since the start of the year, investors in both the DAX and CAC opted to take short terms profits off the table as concerns regarding the impact of a stronger USD and continued uncertainty surrounding the Greek debt crisis moved back into focus.

Having rallied for six straight session, gaining almost 3% against a basket of major peers and after a short lived intraday rally towards 100.00 yesterday, the dollar index sold off as much as 0.9% lower today as jittery investors adjusted positions after the release of US economic data. Having spent much of the European morning session holding around 99.50 investors reacted to rebounding retail sales and sold off the dollar as a camp expecting an interest rates rise very soon continued to grow.

Data released earlier this afternoon showed advanced retail sales climbed 0.9% m/m in March, its biggest leap in a year, as evidence of a pickup in momentum towards the end of what has been an unimpressive first quarter of the year strengthened the bull case for stronger growth in 2015. Rebounding from the previous month’s reading of -0.5% it further highlighting the tepid start to the year which provoked an uncertain outlook among many investors and brought into question the Fed’s timing of any increase in interest rates.

Inflation data offered further support to a recovering outlook with PPI final demand rising by 0.2% m/m in March, rebounding from the previous month’s reading of -0.5% m/m. The recovery in factory gate prices which had been falling for the past four consecutive weeks saw investors pull out of the relative safety of the USD and cautiously back into risk assets. Both the S&P 500 and DJIA opened higher but have since pulled back slightly as investors adopt a cautious approach ahead of tomorrow’s busy day for global macroeconomic releases. 

DXY pulls back after testing levels towards 100.00 yesterday

DXY Curncy DOLLAR INDEX SPOT 2015 04 14 15 23 06

US retail sales rebound in March

RSTAMOM Index Adjusted Retail 2015 04 14 14 08 13

Topics: Inflation, EUR, DXY
More from: Kash Kamal