European equity markets rebounded and climbed higher in today’s trading session as robust Markit Services and manufacturing PMI data improved market sentiment. The CAC, DAX, IBEX and the London benchmark gained between 0.35% 1.99%, while the euro rebounded towards 1.35 against the US dollar.
On the macroeconomic front, German Manufacturing PMI flash rose to 52.9 in July, beating expectations of 52.00, while the Composite Flash PMI climbed to 55.9 in July, showing signs of improving market conditions in the German economy. In Eurozone, Markit Services PMI Flash increased to 54.4 in July, beating estimates of 52.7. However, in the UK retail sales rose slightly by 0.1% in June missing expectations of a 0.3% increase, adding further pressure to sterling which retreated more than 0.35% against the US dollar towards 1.1695.
In the US, weekly jobless claims declined by 19,000 last week to reach 284,000 beating expectations. On the other side, new home sales fell in June by 8.1% m/m.
The IMF surprised the markets in late trading after reporting that it has lowered its outlook for global growth in 2014 due to weaker economic expansions in China and the US. Persistent tensions in Middle East and ongoing uncertainty between Russia and the West have raised fresh concerns about a possible surge in crude oil prices.
In London, banks and mining stocks continued to provide strong support to the market, as risk appetite has increased. Base metal prices posted fresh gains today with aluminium climbing higher towards 2,050, while copper also edged higher to close at 7,169.
Tomorrow, market participants will be keeping an eye on the releases of the German GfK consumer sentiment as well as the Ifo survey. In the UK, the main focus will turn to the release of the GDP data, which could give further direction to London equities and sterling.