The first hours of trading the European Stock Markets were marked by the publication of a relevant economic indicator in China, the PMI index for the manufacturing industry, prepared by HSBC economists. According to HSBC economists the manufacturing activity in this country fell to 50.0, the lowest level in six months. This reading was below the 50.4 recorded in October and 50.3 estimated by economists.
The first hour of trading did reflect investors’ concerns and this was compounded by the publication of the PMI index for the manufacturing industry in Germany and in the Eurozone, as the values were below the estimate. After the opening of US market, the situation was reversed with the publication of US economic data with values above expectations.
The market will be impacted today by Loretta j. Mester’s speach from Fed, and tomorrow at the opening bell of the European markets by the speech of Mario Dragui.
In recent days, European markets had an overperformance comparing to the Americans. There are several reasons for this behavior, of which to highlight the words of Mario Draghi at the European Parliament and a recent study by JP Morgan which maintain their preference for the European Stocks, justified by the possibility of the ECB implement quantitative easing measures and the fact that European indices have better ratios (as the PER, share price divided by earnings per share of the company) more appealing than Americans. Another factor has to do with the expectation of some international investors that the difference in returns between the American and European markets may decrease by the end of the year. For example, since the beginning of the year, the SP500 appreciated by 10.84%, while the DAX fell 0.83%.