European Markets, Fundamentals

European Stocks Start Week with Higher Close Following Confusion in Recent Sessions

Europe Session Key Developments

• Indicator releases raise optimism in markets
• Energy commodities move higher

European Markets closed higher across the board as economic indicators came in better than expected despite showing some signs for concern. Raising optimism were readings on confidence for the Euro-Zone in June, which beat out estimates along with a gain in retail PMI despite contraction for the ninth month in sales. Markets have trended lower in the past two weeks and recovery today may not be more than a temporary wave up before further downside momentum kicks in over the summer months. Some figures today showing concern were housing and credit in the UK. Consumer credit came in at a paltry 0.3B, with lending for housing, also at 0.3B, the lowest on record. Also, mortgage approvals barely rose from the preceeding month whereas economists polled by Bloomberg expected a considerable instead of more than two thousand to 46.0K. The stall in lending, and poor credit market conditions, raise concern over the recovery in housing. The housing market is seen as a vital component for economic growth ahead as a large bulk of household wealth is established in real estate assets and a large proportion of financial business is conducted and involved with the sector.

FTSE 100                      4,294.03                   +53.02               +1.25%
Trading in the British market led to a gain of more than one percent with all sectors up except for Health Care. On the whole, the gain was the smallest of the five majors as just over 20% of the 102 stock index traded lower. Oil & Gas led the gains at more than two percent, followed by a 1.85% move in Financials. Lloyds led advancers with a 6.12% gain followed by insurer Prudential at 5.89% as Goldman Sachs made positive comments on the sector while also issueing higher ratings on several firms. Oil traded higher as the underlying commodity rose back above $70 per barrel on positive fundamental data.

CAC 40                     3,193.68                   +63.95                 +2.04%
The French market closed higher by more than two percent as all sectors advanced except for Technology, which fell slightly at 0.03%. Industrials and Financials led the pace with respective gains of 3.13% and 2.78%. Schneider Electric gained the most at 4.45% as the company won an award for its APC surge protector. Also seeing a considerable gain were financials including a nearly four percent gain in insurer Axa.

DAX                         4,885.09                    +108.62             +2.27%
Trading in the German market led to the largest gain of the five majors as all sectors advanced with Industrials leading at 3.2% followed by a 2.82% move in Financials. Industrials posted a significant move as fundamental indicators in Europe showed improvement, along with positive overseas data. The sector is expected to grow as economic turnaround progresses. Financials meanwhile rose on the back of Goldman Sach’s positive statement on the sector’s recent stability and future potential. On the downside, retailer Metro fell more than one percent as retail PMI in Germany fell slightly to 46.0 from 46.3.

IBEX 35                     9,845.70                   +158.80                 +1.64%
The Spanish market rose to a new recent high as optimism grew that the nation will not suffer as sharp a decline as previously thought. The index is now the highest on the YTD level of the five majors at more than a seven percent gain. All sectors rose today with gains of more than two percent seen in Financials and Oil & Gas for reasons largely similar to those of other European markets. Banco Santander and Banco Bilbao led the index point move with stock gains of approximately three percent.

S&P/MIB                        19,096.16                    +264.68                  +1.41%
The Italian index advanced back above 19,000 as all sectors climbed with Basic Materials, Consumer Goods, and Industrials higher by more than two percent. Banks Unicredit and Intesa Sanpaolo  led index point moves as optimism in the sector grew following Goldman Sachs’ comment, while holding company Prysmian gained the most at 8.27% following news the firm is in talks to buy rival cable maker Draka in a stock deal.

Written by Roman Kadinsky, CFDTrading Research
Please send any comments about this report to Rkadinsky@fxcm.com