European equity markets climbed higher in today’s trading session despite the euro coming under renewed pressure, breaching 1.24 against the USD. The CAC, IBEX and London equity benchmark index gained between 0.3% and 1%, while the DAX index remained in negative territory as investors remained cautious following yesterday’s disappointing Markit manufacturing PMI data.
On the macroeconomic front, the UK Markit/CIPS construction PMI declined to 59.4 in November compared to 61.4 in October, missing analysts’ expectations. In the US, construction spending rose 1.1% in October beating analysts’ expectations of a modest 0.6% rise and spreading upside momentum across the Wall Street equity markets.
However, the recent US dollar strength continues to weigh on market sentiment adding further pressure to most commodity prices. Crude oil prices reversed yesterday’s solid gains as the strong upside rally seemed to be short-lived. Brent front month futures retreated towards $71 per barrel, while WTI front month futures plunged over 2% towards $67 per barrel. Base metal prices posted fresh losses in today’s session with copper falling below $6,400 and aluminium breaching below $1990.
In other news, Russia’s economic development ministry warned today that Russia could fall into recession in 2015 as Western sanctions and a sharp decline in crude oil prices started to take effect in the country’s economy. According to latest estimates, Russia will contract by 0.8% in 2015 missing earlier expectations of a 1.2% growth.
Tomorrow, the main focus will turn to the release of the Markit services PMI in the US, UK and Eurozone as well as European retail sales and US Federal Reserve Beige Book.