European Markets, Fundamentals

European Stocks End Week Higher Following Volatile Session

Europe Session Key Developments

•    Commodities Higher as Dollar Weakens
•    Earnings/Fundamentals Lift Sentiment

European markets ended the session slightly higher following sharp selling pressure on the release of US Non-farm Payrolls. The figure posted weaker-than-expected for October, while September data saw a narrower revision to losses. Countering the bearish signal was a rise in hourly earnings. Ultimately data closer to home helped markets close higher, as German Factory Orders rose for a seventh month. Also, Q3 results from insurers Assicurazioni and Hannover Re, as well as cement maker Lafarge, boosted sentiment. At the same time, a bit of optimistic euphoria seems to be taking hold as Royal Bank of Scotland, which reported writedowns/loan-losses of £3.3B and a net loss of £1.6B, saw its shares rise more than five percent. Ultimately, traders saw positives in lower operating losses and a statement from CEO Hester that bad debt losses have likely “plateaued.” Despite the weakness in RBS, further pressure from a sharp slide in commodities seemingly didn’t have a major effect on trading sentiment. Despite closing the week with minor gains, markets appear to be finding a bottom following the recent correction. At the same time, news of central banks beginning to pull back on emergency actions, including the ECB’s planned final loan auction in December, may hit into economy recovery in the next few months. Caution should be undertaken as equities attempt to find direction in the uncertainty of sustainable near-term growth.

FTSE 100                      5,142.72                   +17.08               +0.33%
British stocks ended the week higher by 1.95% as four of ten sectors fell along with a third of stocks. Financials rallied the most with a gain of 1.56% as RBS rose 5.25% on optimism despite loan losses rising at the bank.  Other major gains for the index included greater than two percent gains in HSBC and Standard Chartered. Ultimately, lower commodity prices had little effect on trading today while further weakness in oil could ultimately lead to underperformance in the more raw-material indexed FTSE.

CAC 40                     3,707.29                   -1.44                 -0.04%
Stocks in France closed slightly down to end the week with a high 2.76% advance. On the session, more than half of stocks closed lower along with eight of ten sectors while Financials were lifted by 1.5% as Credit Agricole rose 3.31% ahead of the bank’s Q3 results next Tuesday. Overall the index remains a strong performer on the year, up more than 15% with similar gains to the DAX and FTSE.

DAX                         5,488.25                  +7.33              +0.13%
German equities closed slightly up with gains in more than half of stocks along with five of nine sectors as stocks shifts between gains and losses for much of the trading day. Ultimately automakers climbed more than one percent along with major firms including steelmaker ThyssenKrupp and Commerzbank. German factory orders grew for the 7th month as export demand appears to be growing, a positive for the heavily trade dependent nation. Further improvements in trade will facilitate outperformance in the index.

IBEX 35                     11,580.60                   +31.70                +0.27%
Spanish equities closed higher as nearly all sectors advanced along with almost two-thirds of stocks. Major gains were made in Iberia airlines, up 4.76%, as British Airways may be merging with the firm. Also rising was a nearly three percent move in insurer Mapfre as earnings in Germany and Italy boosted insurance companies. The nation’s two largest banks saw small gains of less than one percent while the general theme in Spain remains optimistic. The index remains the best performer out of the five majors, with a gain of nearly 26% and should continue to remain strong as growth in Latin America and Europe lifts stocks.

FTSE MIB                        22,549.64                    -32.60                  -0.14%
Italian stocks closed slightly lower to end the week up a respectable 2.2%. More than half of stocks closed lower including fractional declines in Italy’s largest banks, UniCredit and Intesa SanPaolo. Ultimately leading the charge was a 3.35% rise in Banco Popolare, along with a 5.51% jump in shares of cable maker Prysmian as the firm expects strong final quarter earnings as subsea cable sales are forecast to rise.

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