European equity markets extended losses in today’s trading session as fairly disappointing economic indicators from the US and Eurozone weighed on market sentiment.
On the macroeconomic front, the Eurozone’s Markit Services PMI data was below expectations at 53.2 in May. The German services PMI also fell to 56 in May from a 56.35 in April, weighing on the EUR which slid lower to retest the 1.36 area. In addition, there were strong expectations in the markets that the ECB would cut benchmark interest rates at the upcoming ECB meeting tomorrow, while some also expect a move to negative deposit rates.
In the UK, the Markit/CIPS services PMI data managed to beat expectations with a reading of 58.6 in May compared to 58.4 in April, verifying signs of improvement in the UK services sector. Sterling rebounded from earlier losses and traded around 1.675 against the USD.
The US ADP national employment figure showed the US economy added 179,000 jobs in May, missing analysts’ estimates of 210,000. However, we received fairly optimistic services PMI data from the US as Markit services PMI increased to 58.1 in May, while the ISM non-manufacturing business index rose to 56.3 in May versus expectations of 55.5. The USD index consolidated within the recent range near 80.5, while the Dow Jones held around the 16,730 points in early trading.
A large decline in crude oil inventories offered support to crude oil prices. Brent front month future climbed above 109 per barrel, while the WTI front month contract also rallied more than 0.8% towards $103.5 per barrel.
Investors’ attention has switched to the much-anticipated ECB meeting tomorrow as well as the Bank of England’s interest rate decision. The release of the US weekly jobless claims will also be on the radar.