Comment: European Equities Propped Up By Deal Activity, Better Economic Data
March 10, 2014 10:26 am
Equities little changed in European trade, faring better than Asian peers as deal news props up fragile sentiment for now – Iliad shares jumped after Bouygues said it’s in talks to dispose some of its mobile-phone assets to the company. Rolls-Royce meanwhile advanced after Daimler said it will sell its JV stake to the aerospace and defence giant. Fyffes and Chiquita Brands are teaming up to make the world’s largest banana company and Reckitt Benckiser has added to its ‘sexual wellbeing’ collection with K-Y lubricant brands.
Adding to the upbeat tone, euro zone sentix index hit a near-3 year high, suggesting investors in the region are relatively sanguine about the state of the euro area at the moment. At the same time, Italian industrial output show a 1% rise on the month, topping market expectations – good news for new Italian PM Matteo Renzi.
Market participants, though welcoming the deal news and improving economic fundamentals in Europe, still exhibit nerves regarding the geo-political tensions in the Ukraine as Russian forces claimed another border over the weekend. Though talk of military action has been played down by Russia and Western powers, the crisis is far from over. The protracted nature of this crisis warrants a degree of risk aversion, denting appetite for risk-assets and keeping investors running back to the safety of selected safe-havens such as core government bonds.
Asian markets last night declined following a drastic drop in Chinese export data and Japan’s Q4 GDP being revised lower; both reports dampened investor optimism about the health of the global economy with concerns about China’s slowdown now far more pronounced than before dragging down commodity prices, in turn, slapping the mining sector.
Still, equity markets showing respectable character with bullish traders feeling relatively sanguine in the short-term, hopeful that policymakers can work out a solution to the Ukraine crisis. Furthermore, Friday’s better than anticipated nonfarm payrolls data cheered market participants who were fearful that the US economic growth froze during the past 3 months. Friday’s job report actually suggested otherwise – the labour market in the US is healthier than many expected with upward revisions for previous months.
Additionally, it means the Fed can continue down the path of tapering its bond-buying programme which is now widely factored-in by investors who are finally comfortable with the end of QE so long as US economic fundamentals reflect that. Charles Plosser, hawkish Fed head in Philly reckons the US economy can push out growth of around 3% this year so tapering is justified – investors are sanguine with the current pace of $10billion cut monthly, expected again at this month’s meeting.
Equities little changed in European trade, faring better than Asian peers as deal news props up fragile sentiment for now – Iliad shares jumped after Bouygues said it’s in talks to dispose some of its mobile-phone assets to the company. Rolls-Royce meanwhile advanced after Daimler said it will sell its JV stake to the aerospace and defence giant. Fyffes and Chiquita Brands are teaming up to make the world’s largest banana company and Reckitt Benckiser has added to its ‘sexual wellbeing’ collection with K-Y lubricant brands.
Adding to the upbeat tone, euro zone sentix index hit a near-3 year high, suggesting investors in the region are relatively sanguine about the state of the euro area at the moment. At the same time, Italian industrial output show a 1% rise on the month, topping market expectations – good news for new Italian PM Matteo Renzi.
Market participants, though welcoming the deal news and improving economic fundamentals in Europe, still exhibit nerves regarding the geo-political tensions in the Ukraine as Russian forces claimed another border over the weekend. Though talk of military action has been played down by Russia and Western powers, the crisis is far from over. The protracted nature of this crisis warrants a degree of risk aversion, denting appetite for risk-assets and keeping investors running back to the safety of selected safe-havens such as core government bonds.
Asian markets last night declined following a drastic drop in Chinese export data and Japan’s Q4 GDP being revised lower; both reports dampened investor optimism about the health of the global economy with concerns about China’s slowdown now far more pronounced than before dragging down commodity prices, in turn, slapping the mining sector.
Still, equity markets showing respectable character with bullish traders feeling relatively sanguine in the short-term, hopeful that policymakers can work out a solution to the Ukraine crisis. Furthermore, Friday’s better than anticipated nonfarm payrolls data cheered market participants who were fearful that the US economic growth froze during the past 3 months. Friday’s job report actually suggested otherwise – the labour market in the US is healthier than many expected with upward revisions for previous months.
Additionally, it means the Fed can continue down the path of tapering its bond-buying programme which is now widely factored-in by investors who are finally comfortable with the end of QE so long as US economic fundamentals reflect that. Charles Plosser, hawkish Fed head in Philly reckons the US economy can push out growth of around 3% this year so tapering is justified – investors are sanguine with the current pace of $10billion cut monthly, expected again at this month’s meeting.
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