European equity markets rebounded on Friday, ending the week on the positive note as risk appetite increased, while the weaker US dollar supported most commodity stocks. CAC, DAX, IBEX and the London equity benchmark extended gains, climbing higher between 0.06% and 0.68%.
On the macroeconomic front, the release of GDP figures from the Eurozone spread optimism in early trading. Germany’s GDP rose by 0.4% in Q4 2013 from a previous 0.3% increase, while Eurozone’s GDP flash estimate for Q4 2013 was reported at 0.3%, beating analysts’ expectations. The euro rallied following the encouraging data, showing signs of improvement in the European economies.
In the US, industrial output fell unexpectedly by 0.3% in January, while capacity utilisation also declined to 78.5% in January compared to 79.2% in December 2013. The results from the University of Michigan/ Thomson Reuters survey were also below analysts’ estimates, suggesting potential that the QE stimulus program could stay for a bit longer than initially expected.
In London, mining stocks added the most points to the market as precious metals prices rebounded strongly. Fresnillo and Randgold gained 5.31% and 1.86%, respectively as silver rebounded above the $20.5 level, while Gold surged to a three month high, trading above 1,300 area.
Next week, US markets will be closed on Monday for the President’s Day holiday, so we expect relatively thin trading conditions on Monday’s trading session. The release of the Japan’s GDP data and industrial output figures could provide some sentiment.