Overall tone in Europe is negative despite UK GDP surprise on the upside
US equities finished lower on Thursday with Dow Jones losing 0.5% to 36,114, the S&P dropping 1.4% to 4,659 and Nasdaq down 2.5% to 14,807. Investors sifted through some mixed economic data that showed while producer prices were lower than expected compared to last month, they remained severely elevated versus last year. Jobless claims unexpectedly rose for a second-straight week, likely due to the impact of the omicron variant, but continued the downtrend. Q4 earnings season kicked off with Delta Air Lines and KB Home rising following their results, while Ford said it plans to increase its electric vehicle production. Treasuries finished higher, as the yields on the 10-year note and the 30-year bond fell 3 bps to 1.70% and 2.04% respectively. US Dollar extended recent declines with DXY lower at 94.72. The focus today will be on Retail Sales and Industrial Production, as well as Consumer Sentiment data for December.
European stocks weakened on Friday with DAX trading 0.7% lower, the CAC 40 dropping 0.8% and the UK FTSE 100 falling 0.2%. The UK economy grew by much stronger-than-expected 0.9% in November, expanding for the first time since the country went into lockdown in February 2020. Still the overall tone in Europe is negative today with Germany reporting another record of more than 81,000 Covid-19 infections in a day, Hungary announcing the fourth short available and French senate approving the government’s latest measures to tackle the virus, including a controversial vaccine pass. GBP continues to trade in the positive territory above 1.37 and EURUSD bulls’ eye 1.15 amid weaker US dollar.
China posted a record trade surplus in December and 2021 as exports outperformed expectations during a global pandemic. Asian stocks slid this Friday as investors offloaded technology shares on growing speculation the Federal Reserve will raise interest rates in March. The MSCI Asia Pacific Index fell as much as 1.3% before paring losses to 0.7% in the afternoon trading. Alibaba, Keyence and Sony Group were among the largest contributors to the benchmark slide. Hang Seng Tech Index, which tracks China’s biggest tech firms, closed down 0.5%. In Japan sentiment worsened as Tokyo raised its Covid alert to the second highest of four levels. South Korea’s Kospi was also weighted town as the central bank increased its policy rate for the third time in just five months.
Oil has reversed losses on Friday with Brent Crude rising 0.4% to $84.79 and WTI gaining 0.1% to $82.23. The weaker dollar caused oil to rise, although an imminent release of crude reserves from a top importer from China capped the price gains. Crude prices turned positive as the dollar had its largest weekly fall in more than a year. However, the gains were limited after Reuters reported that China plans to release oil reserves around the Lunar New Year holidays as a part of a plan coordinated by the United States with other major consumers to reduce global prices.