European Markets, Fundamentals

European Equities Close Higher, Trim First Monthly Loss Since October

Europe Session Key Developments

•    Euro-Zone Unemployment Rises to Ten Percent, U.S. GDP Beats Expectations
•    Commodities Slide, Dollar Continues to Gain Against European Counterparts

European stocks posted their biggest collective gains since December 21 after Euro-Zone unemployment rose less than expected and the U.S. economy posted its largest quarterly gain in six years.  The positive data helped revive risk appetite for investors and pushed European shares higher, trimming their first monthly loss since October.  The biggest driver of market sentiment during Europe’s afternoon trading hours was the U.S. GDP reading, which showed a 5.7 percent expansion for the world’s largest economy in the fourth quarter.  The data showed an improvement in the U.S. manufacturing sector and a 2 percent rise in consumer spending.  The GDP figure also pushed the U.S. Dollar higher against its European counterparts as the U.S. Dollar Index rose for a fourth consecutive day.  The Euro continued its bearish trend as concerns over Greece’s debt problems weighed on the regional currency.  Looking ahead, a plethora of economic data will likely drive markets and price action next week including the release of Euro-Zone PMI data on Monday and German retail sales on Tuesday.

FTSE 100                      5188.52                   +42.78                    +0.83%
British stocks rallied in the final day of trading this week after strong fourth-quarter GDP data from the U.S. and a rise in U.K. housing prices in January.  Three stocks gained for each that fell today on the FTSE Index, which was led by 1.4 percent gains in technology and financial stocks.  Bank stocks were led by HSBC, which added 2.6 percent, and Barclays, which gained just over 2 percent on the day.

CAC 40                           3739.46                   +50.67                    +1.37%
Trading in Paris today resulted in over a 1 percent gain, led by Industrials and Basic Materials which added over 2 percent each on the trading day.  The Industrials sector was led by a 4 percent gain in Saint Gobain and a 3.4 percent gain in Vallourec, the world’s second largest maker of steel tubes for oil and gas production.  Basic Materials stocks were led by a 2 percent gain in Air Liquide after the gas producer won authorization to market its products to health providers.

DAX                                 5608.79                     +68.46                  +1.24%
German stocks gained over 1 percent today as nine of the ten DAX sectors closed higher on the day.  The index was led by Consumer Goods and Technology shares which each rallied at least 2.8 percent each.  BMW led automakers higher after announcing that it expects to increase 2010 vehicle sales in the U.S., China, and Germany.  Daimler gained over 3 percent today after HSBC Holdings raised the stock to “neutral.”  Looking ahead, there will be a number of economic indicators released for Germany including retail sales on Tuesday and PMI services on Wednesday.

IBEX 35                       10947.70                   +118.40                 +1.09%
After posting the biggest loss among Europe’s major indexes in the last two days, the IBEX added just over 1 percent during today’s session.  The index was led by a 1.9 percent gain in financial shares and a 1.8 percent rise in oil & gas companies.  Gamesa was the biggest winner on the day, adding over 3.3 percent during the session.

FTSE MIB                     21896.29                  +293.16                 +1.36%
The Italian benchmark index rallied over 1 percent today despite an unexpected rise in the nation’s unemployment rate to 8.5 percent.  Stocks in Milan snapped their two-day losing streak and trimmed their weekly loss to 3 percent.

Written by James Russell, CFDTrading Research
Please send any comments about this report to JRussell@fxcm.com