Europe
Better than expected services and manufacturing sector data as well as a weaker euro helped European equities gain ground on Tuesday overcoming a wobbly start after poor Chinese economic data.
PMI’s from France were disappointing but this was overshadowed by better results from Germany and the Eurozone as a whole. The better Euro-area data supports ECB President Mario Draghi’s claim that expansionary monetary policy is feeding through into the economy.
The HSBC (LONDON:HSBA) Flash China manufacturing PMI indicated contraction within the sector and fell to an eleven month low in a worrying sign for global growth.
UK
UK stocks saw another strong day of gains with the benchmark FTSE 100 stock index making another record high above 7,065. Record low UK inflation while wages are rising should boost the spending power of UK consumers while an improving Eurozone economy could help demand for UK goods and services in the region.
Consumer price inflation fell to zero percent year-over-year for the first time on record and is being hailed as a victory for the coalition government’s economic plan. Low inflation is normally seen as a sign of slowing economic activity but when it’s driven by lower food and computer prices it’s a good thing.
Shares in mining giant Antofagasta (LONDON:ANTO) moved higher despite losses within the mining sector following a surge in copper prices, though gains were contained by the weak reading on China manufacturing.
Tesco (LONDON:TSCO) shares lower slipped on the announcement of another legal claim from shareholders over the supermarket’s profit misstatement.
International Airlines Group (LONDON:ICAG) broke above 600p after an analyst upgrade and the prospects of a completed deal for Irish carrier Aer Lingus (IR:AERL).
Shares in British Gas owner Centrica Plc (LONDON:CNA) were lower after broker a downgrade and ahead of crucial talks with a competition inquiry panel.
US
US markets saw modest gains in major indices but that masked some big moves in the technology sector with Twitter Inc (NYSE:TWTR), Netflix Inc (NASDAQ:NFLX) and Google (NASDAQ:GOOGL) all seeing strong gains.
Google has hired the Morgan Stanley (NYSE:MS) CFO Ruth Porat as its new CFO sending shares over 2% higher. Porat is a big hitter having previously worked in tech during the nineties and her banking background might increase the chance of a capital payout for shareholders.
Shares in Twitter gained as much as 5%, breaking back through $50 with investors pleased with the latest rollout of features in the platform including video and an offline tweeting service.
Shares in Netflix gained over 3% after two analyst upgrades.
FX
The US dollar was mixed in a volatile session of trading after both US and European economic data beat expectations.
The British pound was a notable laggard after consumer price inflation dipped to 0%, below expectations of 0.1% and to the lowest reading on record. The pound was one of the biggest fallers in dollar-terms with GBP/USD back beneath 1.49. EUR/GBP extended recent gains to just short of 0.74.
Better than expected European PMI and US CPI data saw EUR/USD whipsaw between 1.09 and 1.10 with 1.1044 the peak reached after the FOMC meeting on March 18.
The Swiss franc is continuing its renewed bout of strength after the FOMC meeting caused doubts over the timing of the first US rate hike. The franc had lost most of its sudden gains after the SNB removed the euro-peg but is starting to move higher again.
Commodities
Copper prices surged to $2.90 per lb overnight leading into Chinese manufacturing data that eventually disappointed sending the industrial metal down as much as 3% on the day back towards $2.80.
Oil prices were less volatile than usual with WTI closing the gap slightly on its spread with Brent. A report has indicated oil prices may be set to slip further as refineries shut for maintenance in the second quarter further curbing demand.
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