Date: Friday 01 Jun 2012
-Chinese PMI comes in under forecasts
-Eurozone unemployment at record high in April, at 11%
-60% of Irish expected to have voted for fiscal compact
-UK PMI shows weakness in orders from US, China and UK
Stoxx 600: -1.58%
Ibex 35: 0.58%
The main European equity benchmarks are now trading mixed, as at the start of the session, but losses in northern European equity indices have steepened sharply. That following poor macroeconomic data out of China overnight and in the Eurozone this morning and ahead of this afternoon’s non-farm payrolls and ISM data scheduled for release Stateside.
Simply put, between yesterday and today investors have had to contend with a string of poor indicators in most of the major economic blocks, US, China and the UK. As if that were not enough, unemployment in the Eurozone stayed at a record high in April, at 11.0% (even if that was as expected).
All of the above has sent market interest rates to new record lows and Brent crude futures and the single currency into a tail-spin.
Worth noting however, analysts at Barclays expect Chinese growth to trough in quarter two. Furthermore, following today’s data economists at Citi and JP Morgan now expect the Bank of England to extend its quantitative easing policy.
Acting as a backdrop, Spain’s Vice-President, Soraya Saenz de Santamaria, met yesterday evening with US Treasury Secretary Timothy Geithner. According to the Spanish press one of the topics discussed was the possibility of injecting rescue-funds directly into Spanish banks, although the Treasury’s communiqué made no reference to that.
As an aside, some observers seem to be watching out against the risk that clearing house LCH Clearnet could at some moment decide to increase margin requirements for trading in Spanish CDS contracts.
Lastly, last night the International Monetary Fund refuted reports that it is in the planning phase of a €300bn bail-out for Spain.
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