industrial orders

European Stocks Generally Higher on Industrial Orders, U.S. Fed Comments

Europe Session Key Developments

•    U.S. Fed Chairman Bernanke Says Interest Rates to Remain Low For Foreseeable Future
•    Standard & Poor’s Says It May Downgrade Greece’s Credit Rating
•    Europe Industrial Orders Unexpectedly Climb, Boosted by Machinery Demand
•    Euro Rises Against Greenback, Cable Falls

European stocks were mostly higher today on surprisingly strong industrial orders data for the region and commentary from U.S. Fed Chairman Ben Bernanke that indicated low rates would remain for the foreseeable future.  Equity markets in France, Germany, Italy, and the U.K. rallied for the first time this week, while Spanish stocks fell for a third consecutive session.  Investor sentiment increased during the early hours of trading after Germany announced a rise in its GfK Consumer Confidence Survey, as the index rose from 3.0 to 3.2 in March.  The European Union’s statistics office in Luxembourg announced soon after that the region’s industrial orders unexpectedly rose 0.8 percent in December.  The surprise increase was led by a rise in demand for machinery and capital goods and boosted investor confidence regarding the strength of Europe’s recovery.  As a result, both stock and commodity prices closed slightly higher, as crude oil returned to $80 a barrel and agricultural products gained.  Gold, on the other hand, closed below the $1100 mark for the first time in seven sessions despite Dollar weakness.  The U.S. Dollar Index posted its second loss in three days, closing just above the 80 level for a sixth straight session.

In the final hour of today’s trading, investors cheered comments out of the U.S. from Fed Chairman Ben Bernanke that interest rates would remain low going forward.  The Fed Chairman stated that the country’s “nascent” recovery, as seen by low rates of resource utilization and high unemployment, would require low rates “for an extended period.”  This commentary offset lingering concerns for European investors that their region’s own economic recovery still faces serious hurdles.  Unemployment in the region remains above 10 percent, and sovereign debt issues have gone unaddressed thus far.  EU leaders may be forced into action soon, however, as Standard & Poor’s said today that it will consider downgrading Greece’s credit rating in the near future.

FTSE 100                         5342.92                     +27.83                     +0.52%
British stocks traded higher today for the first time this week on strength in the technology and financial sectors.  Leading financial shares higher was Lloyds Banking, which gained 3.4 percent as investors await the company’s earnings reports tomorrow.  HSBC Holdings followed suit, gaining 2 percent as investors await its earnings next week.  Shares of HSBC, Europe’s largest bank, have rallied for eight consecutive days.  Technology shares were the second-strongest sector today as Sage Group and Autonomy Corp. gained at least 1.4 percent each.

CAC 40                             3715.68                     +8.62                     +0.23%
French equities closed higher today despite higher-than-expected job losses in December, as technology shares gained over 1.8 percent.  STMicroelectronics posted a 2.6 percent gain to lead tech stocks, while Cap Gemini and Alcatel-Lucent gained at over 1 percent each.  Yesterday, STMicroelectronics introduced a new family of highly efficient power rectifiers to help power-suppy companies achieve energy-efficient approvals.

DAX                                  5615.51                    +11.44                     +0.20%
German stocks posted a small gain after a final reading confirmed that the country’s economy stalled in the fourth quarter of 2009.  Fresenius Medical Care posted the largest gain on the DAX, adding over 4 percent on news that the company would double its budget for acquisitions to $400 million this year.  Volkswagen was the next strongest DAX performer today, gaining 1.6 percent after setting aggressive sales goals yesterday for its growing line of products.  Volkswagen also received a ‘Canadian Car of the Year’ award.

IBEX 35                          10254.00                     -58.90                     -0.57%
Trading in Spain led to the only decline among major European indices as financials fell over 1.3 percent.  Spanish banking giants BBVA and Banco Santander both dropped over 1 percent after Barclays Capital reduced its outlook on the financial institutions.  Barclays analysts downgraded BBVA from “overweight” to “underweight” and cut Banco Santander from “equalweight” to underweight”.  Telecinco continued its volatile trading of the last few weeks, dropping over 2.2 percent today.

FTSE MIB                     21346.31                     +122.24                    +0.58%
Italy’s FTSE MIB gained for the first time this week despite disappointing retail sales in December.  Trading in Milan led to a near 3 percent gain for STMicroelectronics after BofA-Merrill Lynch kept the chipmaker as its top pick for the industry.  Banco Popolare gained 2 percent after an upgrade from Banca Akros, while investment bank Mediobanca added 2.8 percent on better-than-expected net income.

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