Stocks hover around multi-year highs on impending ECB QE

Friday, February 27, 2015

European equity benchmark indices fluctuated around multiyear highs today, with most major stock indices trading tentatively higher on the day. Risk assets were supported by improving investor confidence and the impending prospects of QE from the ECB. With the region's central bank due to turn on the printing presses in March, starting its €60bn monthly asset purchase programme next month, market participants were shifting portfolios into higher yielding assets as they positioned themselves ahead of the move. However, the euro remained under pressure today after yesterday’s 1.43% sell-off against the dollar as investors favoured the greenback amid continued uncertainty surrounding Greece’s future in the single currency union, despite solid progress being made between eurozone finance ministers this week.

Headlines were dominated by slower than expected growth in the US after data released earlier this afternoon showed the second revision of Q4 GDP grew at an annualised 2.2% q/q, lower than the preliminary reading of 2.6% q/q. Despite the slight tempering in fourth quarter GDP data, the revised reading for personal consumption came in broadly in line with expectations at 4.2% during the fourth quarter as domestic demand grew at its fastest pace since Q1 2006. With underlying conditions still indicating a positive outlook for the US economy the longer term prospects still remain optimistic with demand drivers likely to remain supportive over the longer term, acting as a boon for risk assets. Despite this, short term investors were taking the slight miss as an opportunity to take profits with the DJIA and S&P 500 both trading slightly lower at the time of writing. 

EUR remains under pressure as investors favour the greenback

GDP CQOQ Index GDP US Chained 2 2015 02 27 15 34 39

US Q4 GDP data is revised slightly lower

GDP CQOQ Index GDP US Chained 2 2015 02 27 15 34 39

Topics: GDP, USD, ECB, EUR
More from: Kash Kamal