Strong gains in the US and European equity markets

Monday, February 24, 2014

European equity markets rebounded from earlier losses and climbed higher today, as robust gains in the US equity markets spread optimism and set a bullish tone across the markets. The CAC, DAX and the London equity benchmark index climbed higher between 0.4% and 0.87%, while the Dow Jones and S&P 500 indices have been trading more than 1% higher, at the time of writing.

In London, weaker than expected corporate earnings results from HSBC initially added pressure to the market, limiting risk appetite in early trade. HSBC retreated by 2.8% after reporting its pre-tax profits at $22.6 billion, missing analysts’ expectations of $24.3 billion. Standard Chartered also declined by 0.84%.

Mining stocks also came under pressure following a report that showed Chinese banks were decreasing their loans to property developers, raising renewed concerns about the Chinese economic prospects. Antofagastra, Rio Tinto, Anglo American and Glencore fell sharply between 0.75% and 2.3%. However, Randgold and Fresnillo managed to buck the downtrend in metals and posted strong gains as precious metals prices climbed higher with Gold eyeing the 1,350 level.

On the macroeconomic front, the figures were fairly mixed. The German Ifo survey showed improving current economic conditions and expectations in the German economy. In the US, the Markit Services PMI fell to 52.7 in January, while the Dallas Fed manufacturing index retreated sharply to 0.3 in February compared to 3.8 in January.

It has been a fairly volatile trading session for both equity and commodity markets today, while the US dollar has been trading sideways with the USD index around 80.2, failing to provide a clear direction.

Tomorrow, investors will be watching closely the release of the German GDP data as well as US monthly home prices, consumer confidence and Richmond Fed index regarding a better insight for the US economic conditions and prospects.

 

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