European Equities Mixed, Buoyed by U.S. Recovery Optimism

European equity markets saw their rally stemmed as global data shook investor sentiment regarding a full recovery. Early in the Euro session, Chinese officials announced that regulators are preparing for a steep decline in housing prices, totaling up to potentially 60 percent of value losses on real estate values. However, at the end of the trading day Wednesday, investors found silver lining in reports coming from the United States, which showed expansion in the U.S. service sector. The ISM Non-Manufacturing Composite, an index which measures the rate of expansion or contraction in the service industry, expanded to 54.3 in July from 53.8 in June. According to Bloomberg, the median expectation was that the composite would fall to 53.0. Overall, the FTSE, IBEX, and S&P/MIB lost less than 0.30 percent each, while the CAC and DAX were up by more than 0.35 percent, respectively.

Looking ahead to tomorrow, there is a flurry of economic data that will prove market moving. German Factory Orders for June are expected to show expansion by 1.4 percent. However, the Bank of England and European Central Bank Rate Decisions will prove to be more market moving. While both central banks are expected to leave rates on hold, investors will pay attention to the rhetoric employed, in order to gauge the strength and confidence of the recovery.

FTSE 100 5386.16 -10.32 -0.19%

The FTSE 100 finished another 10.32 points lower, or 0.19 percent, to close at 5386.16 after intraday trading. The British index was largely mixed, with five sectors finishing higher and five losing ground on Wednesday. The telecommunications sector was the top performer, adding 0.95 percent; it was led by Vodafone, which finished up 1.32 percent to close above 150. The FTSE was weighed by its financial sector, which gave back 0.64 percent. Standard Charter’s performance was particularly disappointing; the company’s share price retraced 5.18 percent despite reporting a 10 percent increase in 1H profits.

CAC 40 3,760.72 +13.21 +0.35%

Despite its British counterpart’s weakness, the French CAC 40 managed to finish higher despite being down nearly 25 points during today’s trading session. The CAC has been trending higher since the middle of June when it reached a low of 3321. The index was led higher by its utilities and health care sectors, which added 1.22 and 1.13 percent, respectively. However, the best performer on the day was Electricite de France, or EDF SA, which gained 5.48 percent today after the French Finance Minister Christine Lagarde announced that power rates in the country will rise by 3 percent for households and 4-5.5 percent for companies on August 15th.

DAX 30 6331.33 +23.42 +0.37%

The DAX 30 added another 23.42 points today, or 0.37 percent, to close at 6331.33. The German index remains the only major European equity index to remain in positive territory year-to-date, now up a remarkable 6.28 percent. Unlike the FTSE 100, the DAX benefitted from an impressive performance out of its health care companies. However, despite adding 1.91 percent during Wednesday’s trading, the healthcare sector comprises only 3.12 percent of the broader DAX index and therefore, was not the predominant market mover. The utilities and basic materials sectors, which combine for roughly a third of the index’s weight, gained 1.12 and 0.94 percent respectively. The only losing sector was the industrial sector, which was dragged down by Siemens AG, losing 1.17 percent.

IBEX 35 10843.30-28.10 -0.26%

The IBEX 35 finished down only 28.10 points, or 0.26 percent, to close at 10843.30 after falling to near 10750 during intraday trading. The index managed to post somewhat of a rally during the opening hours of the US session. The financial sector, which accounts for over 40 percent of the IBEX’s weight, closed down 0.44 percent. Both the telecommunications and utilities sectors finished near even, losing 0.06 and 0.04 percent, respectively. The Spanish index remains the worst performing major European index year-to-date, down over nine percent. However, with that said, the IBEX has rebounded from a low of near 8700 in the beginning of June.

S&P/MIB 21466.44 -31.88 -0.15%

The Italian index gave back 31.88 points, or 0.15 percent, to close at 21466.44 after Wednesday’s trading session. Despite its impressive performance in the last two months, the MIB remains down over seven percent year-to-date.