The major European bourses got off to a strong start tracking the Wall Street rally overnight, with the DAX 30, SMI 20, Stoxx 600 and bourses at Hungary and Denmark hitting all time highs. France’s CAC 40 and Spain’s IBEX 35 hovered around period highs. FTSE 100 and CAC 40 soon corrected from the opening levels, to trade near the flat-line, leaving the DAX 30 to lead the region’s stock market rally.
Dollar Index hit a 19 week low of 89.648 and Euro, Pound, Yen, Yuan etc strengthened over yesterday’s levels to the greenback as an abrupt end to the bond buying program appeared remote, amidst the continuing Fed narrative of transitory spike in inflation.
DAX touched an all time high of 15568 after rallying around 0.80 percent from yesterday’s close, triggered by news of takeover of Deutshe Wohnen by rival and Europe’s largest residential property group Vonovia. While Deutsche Wohnen surged more than 15 percent, Vonovia declined around 4 percent.
Markets shrugged off reports that Germany’s GDP growth rate shrank 1.8 percent in the quarter ended March 2021, despite being both slightly lower than a preliminary estimate of 1.7 percent and contrary to the 0.5 percent growth in the previous three-month bloc.
The business confidence barometer for Germany, as reflected in the Ifo Business Climate Indicator rose to 99.2 in the month of May from 96.6 in April as against the market estimate of 98.2, reflecting overall positive sentiment and overwhelming optimism.
Perception shared by Bank of England Governor, on inflation not being a worry in the medium or longer term, helped markets reduce their preoccupation with monetary tightening worries and focus elsewhere, particularly on economic rebound and growth.
FTSE 100 got off to a positive start but soon traded close to yesterday’s levels with a declining bias. Software leader Aveva group which declared results today led the rally at FTSE 100 after gaining 4.39 percent over previous close. Vodafone group and BT group lost more than 1 percent.
Meanwhile, U.K.’s public borrowing data released today indicated decline in borrowing from £ 47.3 billion a year ago to £ 31.7 billion in April, the first dip since the emergence of the pandemic.
Confederation of British Industry’s data on Retail Sales volume for the month of May dipped to 18 as against the previous month’s reading of 20 and missing the market forecast of 30.
The CAC 40 consolidated around twenty year highs at 6414 levels. Alstom rose to 1.62 percent over yesterday’s levels while both Orange and Essilor Luxottica lost more than one percent.
SMI 20 gained around 0.66 percent and rose to all time high of 11289 with Richemont powering higher by 2.40 percent. Alcon AG lost around 1.26 percent.
Pan European Stoxx 600 rose to an all time high of 446.64, after having jumped 0.14 percent from previous close.
Yesterday, the FTSE 100 had rallied by 0.48 percent, CAC 40 had risen by 0.35 percent and the pan European Stoxx 600 had closed 0.14 percent higher. The Swiss and German stock markets were closed on account of local holiday.
On the data horizon, traders and investors look forward to the GFK consumer confidence numbers from Germany for June and the KOF leading indicators data from Switzerland for May, due later this week for reinforcing the belief in the vaccine led economic turnaround in Euro Area.
Market Analysis
European Stocks Trade Mixed Despite Fed Assurances
2021-05-25 11:41:18
