European benchmark indices sank lower throughout the morning as jittery traders took profits from the recent relief rally on hints of further sanctions against Russia. A mixed bag of economic data over the past couple of days has left many investors struggling with market direction despite broad indicators suggesting growth momentum in the US is back on track.
Yesterday’s release of better than expected durable goods orders and composite PMI were welcomed by a surprise fall in initial weekly jobless claims today, which declined by 10,000 w/w to 311K. Market sentiment took a hit after the third and final estimate of US Q4 GDP came in 0.1% below expectations of 2.7%, slowing from 4.1% in Q3 2013 to 2.6% in Q4. Despite personal consumption growth accelerating by 3.3% during the same period, well above expectations of 2.7% growth, Wall Street opened slightly lower. Both the S&P 500 and DJIA traded between 0.2%-0.3% lower on opening, but have since moved into positive territory before slipping back again as caution prevails.
Spot gold prices slipped below $1,300 for the first time since mid-February as appetite for risk assets increased among investors. Prices have shed almost 7% since their year-to-date peak of $1,392.33 last Monday. A sustained breach and close below the 200 day MA could see further declines towards previous consolidation around $1,240-70. Positive surprises in macro data have largely been overshadowed by tensions between Russia and Ukraine, with the threat of further sanctions against Russia seeing equities and commodities trade with increasing volatility over the past week.