Börse & Märkte

European Stocks Edge Higher On Ease Over Fed Tapering

European stock indices are tentatively higher Monday morning as investors view Friday’s mixed nonfarm payrolls report as an indication that the Federal Reserve will not ease off the stimulus pedal as early as September 2013. Record highs for the S&P500 on Friday and lacklustre session in Asia overnight as investors chew over the HSBC Chinese PMI services data.

 

The world’s second largest economy’s services sector didn’t contract, staying unchanged at 51.3 in July. This was better than some forecasts calling for a contraction so investors have welcomed this report as it suggests China’s services sector remains in growth mode despite the fact that manufacturing activity is now in contraction mode. Commodity prices have perked up with gold up around 3 bucks and oil prices higher too. USD is weaker [which helps commodity prices], underpinned by Friday’s QE-friendly jobs data and the yen is stronger. Core government bonds edge up a little while US stock futures are just about in the black but face some pressure ahead of the open on Wall Street, particularly after Friday’s upbeat session which provides an excuse for traders to book profits.

 

In general, there appears to be some ease in the market over the Fed’s tapering plans; mixed jobs data left the market none the wiser as it suggested slowing growth momentum in the labour market but little to change the picture of a recovery in process. This has left many in the market to delay their expectations for the unwinding of QE, from September to perhaps now later in the year, around December. For the remainder of 2013, Fed head Bernanke only has two press conferences post FOMC meetings scheduled so investors are of the view that he will now deliver the chop to a portion of QE by perhaps December and not September.

 

Back to Europe, macro data will be a key influencer of price-action and has already started to take effect as services PMIs from the euro zone trickle-in; Spanish PMI’s come in a little higher, as do the French [hitting an 11-month high] and Italian figures. A decent showing from all three nations, particularly Italy as activity edges close to growth mode. Germany’s figure came in below expectations, in at 51.3 versus 52.5 – still in expansion mode but indicating slowing momentum there. The overall euro zone PMI services figure came in at 49.8 from 49.6, encouraging as it shows the region’s services activity is returning to growth.

 

In corporate news, banks again are grabbing the headlines with Lloyds Banking Group in the UK shares on the rise amid reports that the bank is planning to restore dividend payouts in an attempt to attract investors ahead of moves to dispose of the UK government’s stake in the bank. Lloyds has not paid a dividend since 2008 so news that the bank is ready to restart payments which could be as much as 70% of earnings within next three years is being cheered. HSBC is due to report 1H earnings soon with pre-tax profits expected to hit $14billion. Looking ahead, we have UK PMI services and euro zone retail sales still to go while in the US, watch out for the ISM non-manufacturing [services] report.