European equity markets rebounded from yesterday’s losses, correcting higher, supported by retail stocks which improved risk appetite. CAC, DAX and the London benchmark index gained between 0.2% and 0.6% but failed to end the first week of the year on a positive territory.
Next surged by 10.04% after reporting a strong Christmas sales report, which helped to raise its profit forecast and announce a special dividend. Marks and Spencer, Kingfisher and Sainsbury also followed the uptrend, rising more than 1.8%.
On the macroeconomic front, we received some fairly disappointing economic data from the US and China, which initially weighed on market sentiment and limited gains in early trading. China’s non-manufacturing PMI was reported at 54.6 in December, compared to 56.0 in November. The ISM New York manufacturing also missed analysts’ expectations as the index was reported at 63.8 in December, much lower than 69.5 in November.
Furthermore, the firmer US dollar has dominated the markets in the last few trading sessions, adding some pressure as the USD index has surged eyeing the 81.0 level, while the euro has started to lose steam against the dollar, falling near 0.5% to 1.36 area.
Next week, the main focus will turn to the US non-farm payroll data as well as the minutes of the latest FOMC meeting, which could provide an insight into the current economic conditions.