European Stocks at Midday

May 23, 2018

European Markets

• Negative sentiment across Europe is being driven by weaker than expected economic data, concerns about the stability of the Turkish economy due to a free-falling lira, and growing doubts about a resolution to the US-North Korea stand-off
• European equities are declining across the board today with the Euro Stoxx 600 -0.99%, the FTSE 100 -0.68%, the DAX -1.59%, and the CAC40 -1.22%
• All sectors in the Euro Stoxx 600 in the red, with energy (-2.74%), materials (-1.87%), and financials (-1.27%) being the largest underperformers
• Market breadth in the Euro Stoxx 600 is notably negative with 484 of 600 stocks currently trading lower
• European markets are trading at 94.03% of their average 10-day volume
• Eurozone May Manufacturing PMI came in at 55.5, below consensus of 56.0, and the lowest level in 18 months. Services PMI for May was softer than projected as well (53.9 vs 54.7 anticipated)
• Germany’s Manufacturing PMI for May was softer than projected (56.8 vs 57.8 estimated). German services PMI was also below estimates (52.1. vs 53.3)
• UK CPI growth in April was 2.4% on a Y/Y basis, modestly below estimates (+2.5% expected). RPI in April was in-line with forecasts (+3.4% vs +3.4% consensus)
• French Manufacturing PMI in May was above expectations (55.1 vs 53.6), but France’s Service PMI was weaker than projected (54.3 vs 57.3)
• According to a Republicca report, Italian President Sergio Mattarella is concerned about the nomination of Giuseppe Conte as prime minister due to his lack of political experience
• President Trump is considering measures to reduce steel and aluminum imports from the EU by 10%, according to a Wall Street Journal report

What is Going on with European Currencies?

• USD$ stronger against most European currencies
• GBP£ has depreciated by 0.87% against the USD$ following softer than projected inflation data, raising doubts about potential interest rate increases
• EUR€ has fallen 0.68% compared to the USD$, after weaker than expected Eurozone manufacturing data drove concerns about slowing economic momentum in the region
• SEK is 1.28% weaker relative to the USD$

Highlights from the European Bond Market

• Risk-off sentiment from Turkey instability and concern over North Korean-American tensions is driving bonds across Europe higher, with a few exceptions
• Italian Treasuries after declining after yesterday’s rally, yields on Italy’s 10-Year bond up more than 10 basis points to 2.41%
• Yields on the 10-Year German bund are 5 basis points lower to 0.50%
• UK 10-year bond yields have dipped nearly 8 basis points today to 1.45%
• Swiss Treasuries, aside from the 2-Year note, are moving higher. Yields on Switzerland’s 10-Year bond are down almost 5 basis points to 0.001%

*Data in Price Return

Euro Stoxx 50 Movers

In local currency.

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