European equity markets rebounded strongly today, supported by a stronger euro that boosted market confidence and increased risk appetite. The euro surged above 1.38 against the US dollar, showing signs of strong improvement in the European economies.
The CAC, DAX, IBEX and the London equity benchmark index posted strong gains to finish the day between 0.5% and 1.2% higher. In the US, equity markets also extended gains as modest PMI manufacturing data verified Fed’s easing monetary policy.
On the macroeconomic front, we received fairly modest PMI manufacturing data from the Eurozone, UK, US and China, which missed analysts’ expectations. However, Eurozone’s unemployment rate fell to 11.9% February from 12% in January.
In London, the benchmark index managed to test a three week high in today’s trading session, supported mainly by banks and financial stocks. Lloyds, RBS and Barclays climbed higher between 1.37% and 1.96%. Mining stocks also posted strong gains as base prices rebounded amid expectations of an upcoming announcement of more measures for a boost of the Chinese economy.
Tomorrow, the release of the UK Nationwide house prices and Markit construction PMI as well as Eurozone’s producer prices will add further momentum to the market, while investor attention will also turn to the US ADP national employment data that could provide an insight ahead of the key non-farm payroll data on Friday.