Global benchmark equity indices started the last week of November on a positive note, as central bankers in Asia and Europe offered additional support to capital markets towards the end of last week. After the PBOC announced a surprise cut in interest rates on Friday, European benchmark indices recorded the biggest daily gains in November on Friday, with most major stock indices breaking out of consolidating patterns. Activity throughout the first session of the week has seen the positive mood extend further as the DAX and CAC find firm support around Friday’s close, adding between 0.7-1.0% early on with gains holding firm towards the end of the session.
The euro managed to stabilise against the dollar on Monday, after Friday’s sharp sell-off which saw the currency slip 1.2% against the greenback, trading below the key area of 1.24 having erased entirely the week’s gains. However, activity on Monday has seen the single currency find firm support around previous lows towards 1.2360 as it edged above 1.24 against the dollar on positive economic data. The widely followed Ifo business climate index in Germany posted a surprise increase month-on-month, improving to 104.7 in November against expectations of a 0.2 deterioration from the previous month to 103.0. Both the current assessment and expectations readings also surprised on the upside, registering 110.0 against 108.0 expected and 99.7 against 98.5 expected respectively.
The euro gained further ground towards the end of the European session after Markit’s preliminary services PMI reading for November came weaker than expected, coming in at 56.3 against expectations of a small month-on-month increase from 57.1 to 57.3. The euro, after spending much of the European session testing tentative support around 1.24 gained traction for a move higher as renewed optimism saw the currency rally above 1.2430 against the dollar. At the time of writing, US equities were continuing their steady march higher, with the S&P 500 and DJIA looking to add a sixth straight week of gains, having opening firmly around Friday’s close today.