Posted on Tuesday, February 5th, 2013 | In Exchange Traded Funds
European stocks rebound on “less bad” Eurozone Composite PMI report.
Tuesday’s trading session saw all of the major European stock indices rebound from Monday’s swoon after Markit Economics reported that its Final Eurozone Composite PMI for January rose to 48.6 from December’s 47.2 and the Flash estimate of 48.2 (NYSEARCA:VGK). The reading remained in the contractionary range (below 50) and the language of the report used a good deal of “less bad” terminology. For example:
Although signalling a further deterioration in output of the Eurozone private sector economy, the rate of decline has now eased for three straight months.
The following is the report’s breakdown of five Eurozone nations, ranked by Composite PMI. The presence of France on the list – with its off-the-charts dreadful reading, makes it obvious that this is not the top five list:
Ireland: 54.9 (2-month high)
Germany: 54.4 (19-month high)
Spain: 46.5 (19-month high)
Italy: 45.4 (2-month low)
France: 42.7 (46-month low)
As of 11:14 EST, the Euro STOXX 50 Index jumped 1.08 percent to 2,653 – staying just above its 50-day moving average of 2,537. After breaking above its resistance level of 2,700 on January 21, the STOXX 50 is once again experiencing resistance at that level, which has been a barrier since the beginning of the new year. Its Relative Strength Index is 36.52 (NYSEARCA:FEZ). The FTSE 100 Index climbed 0.71 percent to 6,291 (NYSEARCA:EWU). The German DAX Index advanced 0.33 percent to 7,662 (NYSEARCA:EWG). France’s CAC 40 Index surged 1.04 percent to 3,698 (NYSEARCA:EWQ). Spain’s IBEX 35 Index rebounded by 2.23 percent to 8,096 (NYSEARCA:EWP). Italy’s FTSE MIB Index jumped 0.97 percent to 16,700. (NYSEARCA:EWI).
As of 11:34 EST, the euro advanced 0.34 percent against the dollar, trading at $1.3589 (NYSEARCA:FXE).
Spain’s ten-year bond yield declined to 5.34 percent on Tuesday from Monday’s closing level of 5.39 percent. Spain’s two-year bond yield dropped to 2.77 percent on Tuesday from Monday’s closing level of 2.85 percent. (NYSEARCA:EWP).
Italy’s ten-year bond yield dipped to 4.48 percent on Tuesday from Monday’s closing level of 4.49 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, March futures for Brent crude oil advanced by $1.19 (1.03 percent) to $116.79/bbl. (NYSEARCA:BNO, NYSEARCA:USO). Crude Gains on European Data, U.S. Deficit News
In Japan, stocks fell after investors reacted to Monday’s news about the leadership voids in Spain and Italy, which (temporarily) elevated the yen against the euro (NYSEARCA:FXY). The Nikkei 225 Stock Average sank 1.90 percent to 11,046 (NYSEARCA:EWJ).
The HSBC China Composite Output Index rose to 53.5 in January from December’s 51.8. The HSBC China Services Business Activity Index jumped to 54.0 in January from December’s 51.7. Despite the good news, the Shanghai Composite Index advanced 0.20 percent to 2,433 (NYSEARCA:FXI). Although the HSBC Hong Kong Whole Economy PMI rose to 52.5 from 51.7 in December, Hong Kong’s Hang Seng Index took a 2.27 percent nosedive to 23,148 (NYSEARCA:EWH). Concerns that the government could introduce measures to slow down the real estate market put a lid on investor enthusiasm.
American stock index futures trading was in positive territory ahead of Tuesday’s opening bell after the flow of positive earnings reports for the current quarterly season approached 75 percent . The March 13 Dow Jones Industrials future advanced 0.43 percent to 13,904 as of 9:14 EST. The March 13 S&P 500 future climbed 0.45 percent to 1,500 (NYSEARCA:SPY). The March 13 Nasdaq 100 future rose 0.43 percent to 2,723.
Bottom line: The major European stock indices made a robust recovery from Monday’s swoon following a moderately-encouraging Final Eurozone Composite PMI for January.
About John Nyaradi (http://www.wallstreetsectorselector.com)
John Nyaradi is Publisher of Wall Street Sector Selector: Your Home For ETF Investing! John writes a weekly guest column, John Nyaradi’s ETF Edge for MarketWatch.com and his investment articles have appeared in many online publications including Trading Markets, Money Show, Yahoo Finance, Investors Insight, Fidelity, ETF Daily News, iStock Analyst , among many others. His book, Super Sectors: How to Outsmart the Market Using Sector Rotation and ETFs, is published by John Wiley and Sons and included among the Years Top Investment Books in the 2011 Stock Trader’s Almanac.