European equity indices continued to drift higher during the last session of the week with yesterday’s encouraging developments between Russian and Ukraine and Greece and its creditors was met this morning with further positivity. Germany’s Q4 GDP reading came in better than expected with their economy growing 0.7% q/q, beating expectations of a 0.3% q/q increase. Investors were encouraged back to the market after a choppy start to the week with the majority of benchmark indices across the region posting solid gains on the day,
The DAX index gave a nod to the renewed risk-on outlook adopted by many investors as the index rallied above 11,000 for the first time, even building on yesterday’s bullish session as equities across the region pushed towards a seven year high. The easing geopolitical concerns and continued willingness from central banks around the world to combat deflationary pressures will act as a boon for stocks and commodities in the near term with the positive sentiment carrying over to the US session, which saw both the S&P 500 and DJIA extend gains for a second straight session.
The release of US January import prices data as well as the University of Michigan sentiment which both slightly missed expectations were largely shrugged off by market participants as investors continued to rotate out of bonds and back into stocks. Stronger earnings in the US, with 71.4% of the companies in the S&P 500 which have reported earnings (about three quarters), have topped analyst expectations and any continuation of better than expected earnings throughout today’s US trading session could see risk assets start the coming week on the front foot.