The fairly modest Chinese economic data weighed on market sentiment today and limited risk appetite. European equity markets posted modest declines, trading range-bound, while trading volumes were thin as US markets were closed for Martin Luther King Day. DAX, CAC and IBEX fell slightly between 0.11% and 0.28%, while the London benchmark managed to end on positive territory, adding just 7.45 points (+0.11%).
On the macroeconomic front, China’s industrial production growth declined to 9.7% in December, while retail sales were broadly in line with expectations, at 13.6% in December. It seems the Chinese economy started to show signs of losing momentum after reporting that its GDP growth in Q4 2013 slowed to 7.7% y/y, compared to 7.8% y/y growth in the previous quarter of 2013.
News about Iran’s nuclear programme dominated the markets today, as investors would like to watch closely any progress of this crucial issue. More specifically, Iran has started the process of curbing uranium enrichment following a recent deal, which would also result in international sanctions on the country being eased. According to the United Nations’ watchdog, extractors used for uranium enrichment were disconnected at the Nantaz plant today, suggesting that by the end of today Iran will be able to resume petrochemical and other exports, which are the main driver of the country’s economy.
In London, gains in retail and healthcare sectors managed to overshadow the sharp losses in the UK banking sector following fairly disappointing earnings results from Deutsche Bank that weighed on European banking stocks. Barclays and RBS retreated sharply by 2.03% and 1.4%, respectively, while HSBC, Lloyds and Standard Chartered also posted fresh losses in today’s trading session.
Furthermore, the USD index remains fairly strong, holding above 81.0 area, adding some pressure to commodity stocks. It seems that the recent robust US economic data have convinced investors that the US Fed will continue its gradual QE tapering in the short-term.