Mixed sentiment in European equities

Wednesday, March 05, 2014

European equity markets were fairly mixed today as renewed concerns about the political uncertainty in Ukraine offset strong European macroeconomic data. The DAX and London’s equity benchmark finished lower on the day, while the CAC and IBX ended on positive territory.

On the macroeconomic front, we received fairly robust Markit services PMI data from China, Eurozone and the UK, which boosted market sentiment. Furthermore, Eurozone’s GDP rose by 0.3% in Q4 2013, in-line with expectations verifying a steady but strong economic recovery in the region. The Eurozone’s retail sales also jumped by 1.6% in January and the region’s Markit composite PMI index climbed to 53.3 in February.

US economic data however was fairly disappointing, prompting some investors to profit take in the US equity markets. The ADP national employment data showed an increase of 139,000 jobs in the US market in February, below analysts’ expectations, raising concerns ahead of the crucial non-farm payroll report on Friday. In addition, the ISM non-manufacturing PMI fell to 51.6 in February compared to 5.3.4 in January.  

In London, mining stocks and financials dragged the index lower. Base metals prices were also under pressure, setting a bearish tone across the UK mining stocks. Rio Tinto, BHP Billiton and Fresnillo retreated between 0.9% and 3%. UK banks also fell sharply today, with Standard Chartered, HSBC, Barclays, RBS and Lloyds ending in negative territory.

Tomorrow, the main focus will turn to the interest rates decisions from the Bank of England and the European Central Bank as well as UK Halifax house prices and German industrial orders. In the US, the release of the weekly jobless claims and Challenger layoffs data could provide a better insight regarding US employment conditions ahead of the key payrolls data on Friday.

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