14.11.14 Friday Morning

The Great Escape: Europe narrowly avoids recession as FTSE falls
 

Europe was the focus on Friday morning, as France and Germany announced their preliminary GDPs before wider figures from the Eurozone are released later this morning. France’s results were better than forecast, 0.3% instead of 0.1%, whilst Germany came in as expected at 0.1%. Though Germany’s figure may not excite, this marginal increase means Europe’s largest economy swerved recession in the third quarter, leading to forecasts of weak growth in the Eurozone, but growth nonetheless. Following these announcements, the DAX was up 10 points to open at 9264, however has slipped 30 points as the morning progresses. This drop is most likely due to forecasters cutting their estimates for Eurozone inflation and growth, to 1.0 from 1.2 in 2015, and 1.4 from 1.5 in 2016. These figures may be the final incentive needed for the ECB to intervene with some form of stimulus package.

The FTSE opened 7 points lower this morning at 6639, following a mixed morning from British stocks. Aggreko was the big winner out of the gate, with their shares rising 4% to 1615.5, after reassuring the markets that their trading has been in line with expectations since August, as well as a 6% rise in underlying group revenue in Q3. This increase in confidence makes a rise in prices unsurprising. It was a different story for Premier Farnell, as the technology producer revealed a slight fall in their full year operating margin, as their 2.7% growth in sales per day in the third quarter represented a weak quarter for their industrial sector. This fractional drop in operating margin translated to a precipitous drop on the markets, with shares presently down nearly 9% to 162.2 as investors were spooked by the disappointing figures.

Finally, the dominating Dow Jones hit another record number last night, however slightly, as closing figures came in at 17631.5, with the S&P and the NASDAQ following suit to close 0.4% and 1% higher respectively. Traders are showing no signs of abandoning the surging Dow, however the slowdown in growth from the large leaps the index was making earlier in the week suggests investors are being slightly more cautious of the Dow’s bubble bursting. The US markets will go through another test later today, as US core and general retail figures are revealed, with forecasters, who have been notably inaccurate in this area for the past few months, suggest a 0.2% rise in core sales. Recently the Dow has weathered all numbers coming out of the US, positive or otherwise, so its reaction to these figures today could provide an indication of the staying power of this run.