Just a day after stronger Chinese macro pointers helped to alleviate concerns over a global economic slowdown, that optimism has quickly faded with the latest Eurozone data once again dampening expectations over growth.
Reflecting the weakness in data, copper prices have given up their entire gains from yesterday and some, while the euro has dropped on expectations that Eurozone monetary policy could remain extremely accommodative for even longer now than previously expected. However, stock market bulls have so far shrugged off the poor data and chosen instead to concentrate on the outlook for rates remaining low for longer, as they have done so since the turn of the year.
So, after a weaker start, European indices have now turned higher on the day.
Data recap: more woes for Eurozone’s manufacturers
The latest purchasing managers’ index (PMI) from Eurozone’s manufacturing (47.8) sector not only disappointed expectations but it remained comfortably below that boom/bust level of 50.0 for the third consecutive month, suggesting activity declined yet again. The Eurozone’s largest economy, Germany (44.5), was again the weak spot. However, Germany’s services sector PMI (55.6) beat expectations and French services sector (50.5) activity unexpectedly grew – although only just. Even so, although the Eurozone services (52.5) sector as a whole expanded, this was still at a slower pace compared to the previous reading. But there was good news from the UK where retail sales unexpectedly jumped 1.1% last month – not that it mattered much for the pound!
Looking ahead: long weekend break
Most financial markets will be closed in observance of Good Friday tomorrow, while bank holidays in several regions on Monday means irregular trading activity will continue at the start of next week. However, before the long weekend break starts, we will have some further data to look forward to from North this afternoon: Canadian and US retail sales, as well as US unemployment claims, Philly Fed manufacturing index, business inventories and CB leading indicators.
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