Chinese Economic Data Triggered Sell Off While The European Stocks Up
AvaTrade | Jan 06, 2014 06:55AM ET
European markets are trading higher despite the disappointing Chinese economic data which pushed the Asian markets lower. The data relayed the message that the nation’s services sector is catching the cold and it expanded at a slower pace during the month of December. This triggered the sell off across the market however, the financial sector was under a major pressure.
Investors are back from their holidays today, and from this week, we will be able to see whether the recent economic data, which was released last week, has correctly priced the markets. Not to mention, the effects of 10 billion tapering are still yet t0o be seen in the coming months. We would expect this could alleviate the volatility in the markets and it could tilt on either side. The economic data- Manufacturing Activity for Germany, and for other the Euro zone nation released so far last week, has installed a positive sentiment for the traders, and it is up to the traders how they will inter-prate this number. However, there is no denial that the divergence continued to widen up between the French economic data and the German economic data, and this is mounting the concerns that perhaps the French economy may slip back in recession.
The Spanish services PMI released this morning has blown pass the expectations of 51.1 with the final reading of 54.2. This has clearly supported the European session which traded in a negative territory during the early hour of trading this morning. The Spanish economy is firing on all cylinders, as the data released today and last week suggested. The unemployment level in the country also fell by 107K – thanks to labour reform policies which are giving more flexibility to employers to tailor the employment market according to their needs.
Having said that, the upward move in the European session is capped by the concern when the Italian economic data – Services PMI came in at 47.9 falling short of expectations of 48.9 and much lower than the previous reading of 47.2
This week’s ECB meeting I would say will focus more towards the German CPI number, which could paint a clearer picture about the inflation. It may be safe to say that unless there is a significant difference in this number, Mario Draghi may not light up any surprise for the markets.
Back in the UK, investors will be closely watching the services PMI data which is due later this morning at 09:30 GMT. It is important to emphasize that the service sector makes two third of the British economy, and a good print of this data could certainly be a bullish signal for the market.
Disclosure & Disclaimer:The above is for informational purposes only and NOT to be construed as specific trading advice. responsibility for trade decisions is solely with the reader.
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