Stocks Experience A Solid Week Following Early Holiday Present from ECB

European stock markets are mostly higher, as the ECB induced rally on equity markets has not run out of steam. Asian stock markets still managed to close mostly higher, with the Hang Seng a notable underperformer. The German index is still heading for a solid weekly gain as the ECB extends QE measures and confirms that it will remain in the market throughout 2017. Peripheral Eurozone markets, which outperformed Thursday, are underperforming and the Italian MIB is down more than 0.4% on the day, but also set to close clearly above the levels from last Friday. The CAC 40 is up and the FTSE 100 up, despite further strengthen in Sterling. Oil prices are also moving higher with WTI currently trading at USD 51.25 per barrel.

UK Trade Deficit Narrowed in October

The UK trade deficit narrowed to GBP 2 billion in October, narrower than expected, though the ONS stats office highlighted that there remains little evidence that sterling weakness has led to a marked increase in exports. Both imports and exports fell in October, the former by 7.1% month over month and the latter by 2.1% month over month. This left the 2015 deficit 17% lower than initially reported, while the restated Q3 deficit for this year was 53% higher than previously reported, at GBP 17.0 billion. The trade in goods deficit came in at GBP 9.7 billion, well off the median forecast for GBP 11.8 billion, and down from the 12.7 billion deficits seen in September.

Following an early holiday present from Draghi, the market heard several mixed messages from ECB members. ECB ready to do more if necessary. Central bankers have been coming out in droves Friday defending and explaining the ECB’s policy stance, with Coeure warning that long term rates will eventually rise, while repeating that the ECB can still lift its monthly QE target if necessary. ECB’s Villeroy meanwhile stressed again that the central bank is doing what is necessary to meet its target, while Visiliauskas said the threat of deflation is gone and Rimsevics adding that the ECB is printing money day and night. Mixed messages to some extend as even Coeure said inflation is going slowly back to target, and the recovery continuing, while keeping the door open to further easing and at the same time trying to warn markets that rates can also go up eventually.

Chinese Consumer Price Index increased to 2.3% from 2.1% in October.  Expectations were for a climb of 2.2%. Prices at the wholesale level also increased.  PPI climbed 3.3% year over year and stands at a 5-year high.  In October PPI was up 1.2%, and broke a streak since of declining producer prices which had been in place since March of 2012.