London View

Equities in Europe are broadly flat and pausing

Equities in Europe are broadly flat Wednesday, pausing for breath after major regional stock benchmarks climbed to six-year highs in the previous session on heightened speculation that the European Central Bank will fire stimulus measures next month.

 

Overnight, Asian share markets rose to their highest level in more than a month following the stellar session in the US on Tuesday in which the S&P500 managed to post its 10th record closing high for the year.

 

That came in spite US retail sales coming lower than expected which weighed on the US dollar – the USD has recently benefitted on the better economic fundamentals out of the US thanks to improving data.

 

The euro is currently trading around $1.3720, paring losses after hitting five-week lows following reports of the likelihood of easing action increased in the euro zone by the ECB in June.

 

That was after a report suggested that Germany’s Bundesbank is ready to support the ECB with injecting stimulus measures such as a negative deposit rate or bond-buying programme, if the situation warrants it.

 

It must be noted that a disappointing German ZEW survey of investor sentiment certainly would have swayed German policy makers to lean toward endorsing further stimulus measures by the ECB. Data from the euro zone will again be eyed with industrial production numbers under increased focus, due shortly.

 

Elsewhere in the FX markets, the UK pound jumped to its strongest level in 16 months versus the euro before the Bank of England presents its quarterly Inflation Report with investors waiting for clues on possible hints of rate increases as early as next year.

 

Meanwhile, market participants were concerned about the developments in the ongoing crisis in the Ukraine where pro-Russian separatists ambushed Ukrainian troops on Tuesday resulting to 7 killed. Moscow’s Micex equity index was trading on the soft side but the Russian rouble is 0.3% better against the dollar at around Rbs34.73.