Börse & Märkte

European Markets Lower On Profit Taking/China Concerns

European markets trade lower today, as growing concerns over rising bad loans in China’s biggest banks and data showing a surge in China’s benchmark money-market rate, overshadowed optimism that the US Federal Reserve might maintain its stimulus measures for an extended period of time. China's benchmark seven-day repo rate climbed 57 bps to 4.02%, causing worries about potential liquidity issues in the country’s money markets.

 

Interbank lending rates spike last June when the People's Bank of China withheld liquidity from the banking system in what was widely reported to be an attempt to punish banks engaged in risky activities or shadow banking. As such, traders this morning take off risk, treading more cautiously ahead of more economic data out this week such as the PMI manufacturing data out of China and the euro zone as well as UK GDP data for 3Q.

 

European stock markets have also hit 5-year highs, leaving them vulnerable to profit taking. Indeed, the Stoxx600 index enjoyed its longest winning streak since June 2010, rising for a ninth straight day. In the previous session, US equities and bonds rose on the back of delayed September US nonfarm payrolls data which showed the economy generated 148k jobs versus expectations of 180k jobs – the report was seen as soft enough to deter the Federal Reserve from tapering asset purchases at the next policy meeting, or even for the rest of 2013.

 

On macro news out so far; the BOE’s meeting minutes showed that members of the central bank voted unanimously in favour of keeping interest rate and QE policies unchanged – an outcome expected by the market. Meanwhile, the Bank of Spain’s data shows the country is out of its technical recession, recording growth of +0.1% in the 3Q. And, the European Central Bank vowed to submit the euro zone's top banks to a comprehensive batch of tests next year – a year-long stress test and asset quality review – in which balance sheets and capital ratios at banks are under scrutiny. Looking ahead, euro zone consumer confidence data this afternoon.