5th Mar 2014 10:53
LONDON (Alliance News) - Harmony has largely returned to all areas of the financial markets Wednesday, after the volatility of the last couple of sessions caused by the unrest in Ukraine. Following Tuesday's relief rally, stock indices are trading slightly lower in the UK and Europe, despite a round of broadly positive macro economic data.
By mid-morning Wednesday, the major UK stock indices have drifted slightly lower, with the FTSE 100 down 0.4% at 6,792.70 and the FTSE 250 down 0.4% at 16,635.20. The AIM All-Share is outperforming the main market, up 0.4% at 892.35.
In Europe, the German DAX 30 is down 0.2%, and the French CAC 40 is down 0.3%.
Growth in the UK services sector eased slightly in February, although by less than expected, remaining remarkably robust given the impact on many businesses of the recent flooding and poor weather in the UK. The Markit services PMI slipped to 58.2 in February, down from 58.2 in January, exceeding economists expectations of a fall to 58.0.
The Markit service PMI readings across the Eurozone for February also have been broadly positive Wednesday, with the readings from German, France and Italy all exceeding expectations. Spain's number came in at 53.7, down from 54.9, and missing expectations of 55.0. While France exceeded expectations, it continues to be the only major European economy with a service sector stuck in contraction, with a reading of 47.2, beating estimates of 46.9.
The eurozone composite Markit PMI recorded 53.3 in February, rising from 52.9 in January and beating the expectation of 52.7.
The second reading of eurozone fourth-quarter GDP left the growth rate unchanged, at 0.5% year-on-year, and 0.3% over the quarter, in-line with expectations.
Eurozone retail sales provided a further positive reading for the region. Sales rose by 1.6% month-on-month in January, reversing the 1.3% decline seen in December and beating economists expectations of a 0.8% rise. On a yearly basis, sales rose by 1.3%, beating expectations of a 0.4% fall.
Ahead of Thursday's European Central Bank meeting, the round of strong eurozone data has done little to boost the euro, which was already trading close to multi-year highs against the dollar. The single currency is slightly lower by mid-morning, currently trading just above USD1.37.
The pound is fairly stable against the dollar, currently trading at USD1.6670. The Bank of England rate setting committee meets Thursday, marking exactly five years since the UK central bank lowered interest rates their historic low of 0.5%.
Calm has also returned to the commodities markets, with gold and oil both well off the highs made on Monday at the peak of tensions in the Crimea. Gold currently trades at USD1,332.50 per ounce, while Brent Oil is at USD108.72 per barrel.
Within UK equities, Admiral group reported a 7% increase in 2013 pretax profit. CEO Herry Engelhardt called 2013 a "baked potato year", meaning "something on the plate that is appreciated but doesn't really grab the spotlight - a comfort food set of results". The insurance group is grabbing investor attention Wednesday, though, as the results have led the stock up 5.9% to lead FTSE 100 gainers.
Still to come Wednesday, US MBA Mortgage approvals at midday, followed by the ADP employment report at 1315 GDP, anf both the US Markit and ISM services PMI's at 1358 GMT and 1500 GMT respectively.
By Jon Darby; [email protected]; @jondarby100
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