London View

European Equities Falter Despite Wall Street's Late Rally

Equities in Europe erase opening gains to trade firmly in the red, shaking off the rebound on Wall Street and Asian markets overnight. Better earnings out Citigroup and healthy US retail sales data helped to distract investors from persistent worries over bloated tech valuations over in the states. Here in Europe, markets are showing apprehension instead amid upcoming economic and corporate data together with to persistent worries about the Ukraine crisis.

 

German ZEW survey will be in sharp focus following the recent run in damp German data while later in the US, the empire state manufacturing release will steal the spotlight. We also have earnings from Johnson & Johnson, Coca-Cola, Intel and Yahoo. On Wall Street Monday, the S&P500 rose 0.8% while in Asia, Japan’s Nikkei 225 index added around 0.8% too, ending a seven-day slump.

 

Other Asian markets were softer however such as Chinese stocks on the back of worries that the PBoC is draining cash out of money markets again, prompting worries about less liquidity. Australian stocks were doing better thanks to the RBA retaining an upbeat view of the economy following the central bank’s meeting minutes. Meanwhile, mining giant Rio Tinto shares rose after it missed expectations with Q1 numbers but managed to retain 2014 production target. Rio Tinto blamed the poor weather hitting its shipping ports and heavy rainfall disrupting its mining operations.

 

Over in the US, markets staged a late-rally on Wall Street following a robust set of retail sales data which showed a jump of 1.1% in March up from a revised 0.7% increase in February, better than market expectations of 0.9% gain – the advance was driven by the US moving past the poor weather during January and February; auto sales rose sharply while building materials and garden equipment saw a healthy pickup in activity.  Citigroup shares rose after an unexpected rise in profits in Q1 thanks to an improving US economy which helped the bank add $673m onto its bottom line that it had set aside for credit losses.