We are coming to you slightly later than usual this morning as we decided to wait for the heavy news flow out of the EU to pass before writing the blog.
This week we have got off to a slow start, and we seem to be still hovering around this levels stuck in a tight range. There has been repeated speculation that this may be the top of the equity markets both here in Europe and across the water in the US but we have failed to breach our short term resistance levels for this play to be confirmed. This mornings news-flow can be seen summarised below;
- French Services PMI 44.1 vs 42
- French Manufacturing PMI 44.4 vs 44.3
- German Manufacturing PMI 47.9 vs 49
- German Services PMI 49.2 vs 51
- Eurozone Services PMI 46.6 vs 46.6
- Eurozone Manufacturing PMI 46.5 vs 46.8
The morning started off on a positive note as the French figures beat analysts expectations, however early gains were wiped away as the German data was at its lowest level since 2009. The Eurozone figures came in broadly in line with analysts expectations. In between all of this we had hints on the newswires that the ECB may in fact be stepping closer to cutting interest rates off the back of the relatively weak data. As we know this would be positive for the European equity markets and be negative for the Euro currency against its major pairs.
We have seen the European equity markets move back to session lows and the US equity futures are trading in the negative. We will remain cautious over the next few hours as any further hints in relation to a rate cut could cause a significant move to the upside. At the time of writing the EURUSD is trading below its significant 1.30 handle.
One of the big headlines today is the Apple Q1 results due our after the closing bell of the US session. Analysts are expecting a lower figure and earnings per share to fall slightly year on year. If its a big miss we could see the US equity indices lose some significant ground in after hour trading.
Happy Trading
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