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ETX Capital Daily Market Bite 4th June 2014: European & Asian stock markets pending on ECB meeting
June 4, 2014 1:07 pmVideo
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European stock markets edged lower Wednesday as market participants digested another soft data report from the Euro area ahead of the closely-watched European Central Bank meeting on Thursday.
Negative closes in Wall Street on Tuesday and weak trade in Asian markets overnight added further pressure on price-action this Wednesday morning here in Europe. After Tuesday’s weaker-than-expected inflation data, the likelihood that the ECB may loosen policy has increased significantly.
This morning, Euro zone May Services PMI came in at 53.2 versus a preliminary 53.5, moderating on the month and again adding fuel to worries that the disinflationary pressures could be mounting up in the region.
The Spanish services sector posted its seventh straight month of growth but the reading for May was slightly down from the prior month in at 55.7 versus 56.5 recorded in April and below market expectations.
Germany and Italy showed growth but France reported a worrying reading with the indicator slipping to 49.1 in May, the first contraction in three months. A reading below 50 indicates contraction while above 50, signals growth.
When taken with the underwhelming manufacturing PMIs from the euro zone and inflation data, these damper data points may suggest that the ECB will act with a package of stimulus measures.
Up next on the macro menu, we have GDP figures from the euro zone which may likely show the region grew 0.2% in the first quarter of this year. Later out of the US, we have an ADP jobs report which is widely seen as a precursor to the non-farm payrolls due Friday.
Overnight in Asia, markets were trading lower but moves are not
significant with markets also looking to central bank decisions out of the ECB and Bank of England on Thursday. Japanese stocks extended gains on the open as a weaker Yen supported the trade. Australia posted abetter-than-expected first quarter GDP, driven by strength in the exports and household sector.
In China, the Shanghai Composite Index fell 0.9% after Chinese media reported comments by the vice minister of environmental protection, Li Ganjie, that pollution control measures could affect China’s GDP growth. Hong Kong’s Hang Seng Index is down 0.5%, tracking losses in the mainland Chinese markets.
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