European equity markets ended fairly mixed in today’s session, struggling to find some direction following weaker economic data from the US that offset any gains coming from better than expected macroeconomic indicators from the UK and Germany. However, the London equity index has climbed higher, supported by robust UK inflation data as the UK’s CPI fell to 1.9% y/y in January below the government’s target of 2.0%.
The US dollar remained weak offering some support to both mining and energy stocks as base metals and crude oil prices rebounded strongly this afternoon. The euro rallied trading above the 1.375 level against the dollar as the German ZEW economic survey showed improving current market conditions in the German economy.
In the US, the NY Fed manufacturing index fell to 4.48 in February compared to 12.51 in January, missing sharply analysts’ expectations. Furthermore, the NAHB housing market index retreated to 46 in February from a previous 56 in January, showing signs of slowdown in the US housing sector. The bearish data added pressure to the US dollar with the USD index falling sharply to retest the 80.0 area.
In London, strong gains in oil and mining stocks helped to index to climb higher. Petrofac, Royal Dutch Shell and Tullow Oil surged between 1.56% and 2.20%. In metals, Anglo American extended gains by adding more than 2.25% in today’s session, while BHP Billiton and Mondi also rose by 1.94% and 1.17%, respectively. The British banks also rallied as risk appetite has remained fairly high. RBS, Barclays and HSBC climbed between 1.36% and 2.4%.
Tomorrow, investors will be keeping an eye on the UK ILO unemployment number as well as minutes from the last Bank of England’s meeting. In the US, building permits and housing starts as well as inflation data will draw market’s attention.