European Markets Continue to Rally, Optimistic Start to G20 Meeting
Europe and Asia's Markets Rally on Positive Talk at the G20 Meeting
Positive momentum in European markets
The rally in major European markets (HEDJ) continued on February 26, 2016. It took cues from the restoration of positive sentiment at the G20 meeting in Shanghai starting on February 26. Policymakers and central bank governors from around the world sought better coordination between economies to lower market volatility and financial turmoil. The slowdown in China, the global manufacturing hub of the world, was a major talking point along with political and trade repercussions evolving from a British exit from the European Union.
Looking at the Eurozone (EZU) indices on February 26 at 4:00 AM EST, the Euro Stoxx 50 rose by 2.2%. The DAX and France’s CAC 40 traded higher by 2.1% and 2.0%, respectively. Positive sentiment was also seen in non-Eurozone markets. The United Kingdom’s FTSE 100 and Sweden’s OMX Stockholm 30 rose by 1.2% and 1.0%, respectively. The euro was trading flat with a slightly bullish bias. European markets rose on February 25 before the G20 meeting as crude prices stabilized. For more information on how the European market reacted on February 25, read European Markets Open Positive as Oil Prices Steady.
French GDP exceeds expectations
The European markets took positive cues from the French economy. It grew by 1.4% on an annual basis in 4Q15—compared to growth of 1.1% in the previous quarter. On a quarterly basis, the GDP (gross domestic product) for France (EWQ) grew by 0.3% in the fourth quarter compared to estimated forecasts that were in line with the previous quarter’s growth of 0.2%.
Inflation rate falls for France and Spain
According to preliminary estimates, on an annual basis, consumer inflation fell by 0.2% in February—compared to a rise of 0.2% in the previous month. On a monthly basis, consumer prices rose by 0.2% in February compared to a 1.0% increase in January. On a monthly basis in January, expansion in household consumption was 0.6% while producer prices contracted by 0.8%. The inflation rate for Spain (EWP) fell by 0.8% on an annual basis in January as estimated by preliminary forecasts—compared to a fall of 0.3% in the preceding month and expectations of a fall of 0.5%. On a monthly basis, Spanish consumer prices are estimated to fall by 0.3% in January—compared to a 1.9% fall in December 2015.
Economic releases in Scandinavian countries
Retail sales in Sweden (EWD) rose by 4.0% on an annual basis in January. This met expectations and exceeded 3.4% growth in December. On a monthly basis, Swedish retail sales rose by 0.7% in January compared to a contraction of 1.5% in the previous month. Danish business confidence fell to -7 points in February—compared to -4 in the previous month. Consumer sentiment fell in Finland. Consumer confidence fell to 7.7 for February—compared to 8.2 in January.
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