London View

Positive US Q2 GDP and ADP Jobs Data

European stock markets remained in cautious mood Wednesday following the tougher sanctions on Russia by Western powers which could greatly cripple the Russian economy. At the same time, traders reined in appetite for risk ahead of the Federal Reserve’s policy meeting with an outcome expected after the European market finish. 

 

Major European benchmarks were mostly flat to lower but US markets attempted to inch higher following some better economic data which enthused market participants. Earlier in Europe, we had euro zone sentiment data which was steady – the European Commission's economic sentiment index for July came in at 102.2, up 0.1 on June's revised 102.1 and ahead of economists' expectations of 101.8. 

 

That wasn't enough to ease concerns in the market, as tougher US and European Union sanctions against Russia threaten to shut off some of the world’s largest energy companies. With violence escalating in eastern Ukraine between government and separatist forces, the EU punished Russia for its involvement by restricting exports of deep-sea drilling and shale-fracturing technologies. President Barack Obama in the US followed EU leaders by announcing a block on specific goods and technologies exported to the Russian energy sector. 

 

Over on Wall Street, US equity futures rose after data showed the economic rebound was greater than forecast in the second quarter. US Q2 gross domestic product rose at a 4 percent annualized rate after shrinking 2.1% from January through March due at least in part to a cold winter. Q2 showed considerable improvement, with consumer spending driving the economy, rising 2.5%. 

 

Separately, the US ADP agency reported monthly jobs data which is seen a pre-cursor to the nonfarm payrolls report, showing the world’s largest economy added 218,000 jobs in July. The actual Nonfarm Payroll number for July is due at 13:30 BST on Friday.