Mixed PMI data weighs on market sentiment

Thursday, January 02, 2014

European equity markets slid lower on the first trading session of 2014, as tepid PMI data from China and the UK weighed on market sentiment, while the stronger US dollar added pressure to most mining and energy stocks. CAC, DAX and IBEX fell sharply between 1.4% and 1.6%, but the London benchmark managed to hold fairly well, compared to the other European markets and ended the day just 30 points lower (-0.46%).

The stronger US dollar seems to have dominated the equity and commodity markets in today’s trading session. The USD index has surged more than 0.5%, above the 80.5 area, adding pressure to mining stocks.

In London, Anglo American, Rio Tinto, BHP Billiton and Glencore retreated between 0.78% and 2.23%. On the other hand, Fresnillo and Randgold ended on positive territory following a strong rebound in precious metals prices with Gold gaining more than 1.7% on the day to retest the $1220 level.

On the macroeconomic front, weekly jobless claims fell by 339,000 last week, fairly in line with analysts’ expectations, while the Markit US PMI increased to 55.0 in December, compared to 54.7 in November. The construction spending has also surged by 1% in November, which was partially supported by the US Thanksgiving holiday. 

Tomorrow, the main focus will turn to the UK Nationwide house prices as well as BoE consumer credit data, which could give a better insight regarding the UK economic prospects. 

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