Greater London, England -- (SBWIRE) -- 12/20/2010 -- Financial spread betting expert Joshua Raymond of City Index (http://www.cityindex.co.uk), looks at EU indices market activity on 15th December:
“Strong economic data from the US which showed that manufacturing and industrial activity was better than the market had expected helped the FTSE 100 and DAX to recover from earlier losses and trade into flat territory towards the close on Wednesday.
Indices had been posting losses of around 0.5% for much of the day on profit taking in the miners and concerns over bank exposures to Spanish debt after Moody’s warned that Spain’s Aa1 rating was under threat from its debt burden. However, it’s seems positive economic data from the US, particularly in light of the cautionary stance from the Fed in Tuesday night’s FOMC statement has lifted sentiment in Europe, helping to encourage stock demand.
The Moody’s caution has weighed on Indices from those peripheral nations within the Euro zone however with the Spanish Ibex and Italian Mib Indices suffering the worst, falling over 1% today as investors continued to fear over the potential need for an Ireland type bailout in the near term.
Much of the afternoon’s reversal was triggered by stronger US economic data. We had New York State Manufacturing grow far beyond market expectations for December coming in at 10.57. This was particularly positive given the sharp fall endured in November but does provide a contrasting picture to the Fed who on Tuesday issued caution over the growth prospects for the US. That said, average work week deteriorated from the previous month as did the number of employees and this does reaffirm the fragility of the US labour market and the cautionary Fed stance.
There is also a degree of confidence coming from the fact that whilst some nations cut their holdings of US treasuries, China, who is the US’s largest foreign creditor, grew theirs to a new 11 month high above the $900bn mark.
UK unemployment rises for the first time in 6 months
Adding to the downbeat tone of the morning’s trade was data which showed that UK unemployment increased to 7.9%. The news came as a bit of a surprise by the markets who had expected little change and naturally one fears that with the VAT hike and public spending cuts to come, this figure could only get worse in the following quarters.”
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