European Stocks Climb Led by Surge in Italian MIB

European stock markets are moving higher, driven again by a 1.70% gain in the Italian MIB, which was boosted by bank stocks, after Italy’s largest lender reported a EUR 13 billion share issue in a bid to clean up its balance sheet and boost profitability. UniCredit shares rose more than 6% on the announcement and Italian bank stocks were up nearly 3%. The DAX managed a 0.60% gain and the FTSE 100 continues to underperform with a modest rise, as Sterling strength weighs on the index that is dominated by multinationals. The ASX closed, and while a pickup in China retail sales and industrial production may indicate that there is still momentum in the economy and helped to put a floor under Chinese bourses, pressure on Hong Kong’s money markets continues to build as funding costs rise to the highest level since 2009 as the Fed readies for a rate hike.

Chinese November Industrial Production increased by 6.2%, compared to expectations of a rise of 6.1%.  On the Consumer front in the world’s second largest economy, retail sales rose 10.8%, which was the largest rise since last December.  Expectations were for a 10.2% increase.  Fixed asset investment came out in line with expectations at 8.3%.

European Employment Remains Subdued

In Europe employment continues to be subdued. Eurozone employment growth slowed to 0.2% quarter over quarter in Q3, in line with the overall slowdown in GDP growth and versus 0.4% quarter over quarter in Q2. The annual rate dipped to 1.2% from 1.3%, but this is still a relatively healthy improvement that ties in with the quicker than expected dip in jobless numbers. Still, disparities across countries remain very high and the high number of young employed in countries such as Spain and Greece are also highlighting the need for further structural reforms.

Sentiment was slightly weaker than expected. The German ZEW investor confidence steady at 13.8 in December, unchanged from the previous month and against expectations for a slight rise after the ECB confirmed further stimulus for next year and going into 2018. The breakdown showed that while short term interest rate expectations declined, long term rate expectations jumped higher, and Eurozone inflation expectations also ticked up, with the latter reaching 78.8 in December, versus just 46.5 in March. The steady headline reading is slightly disappointing, but all in all still consistent with the expected uptick in overall growth as the three-month trend rate continued to improve for a third month and optimists continue to outnumber pessimists.

Related Articles

Gold Technical Analysis

EUR/USD Technical Analysis Forecast

GBP/USD Fundamental Forecast

Natural Gas Fundamental Forecast

 US Indices Forecast