Saturday 16 December 2017

Positive start to quarter for Euro shares but threats loom

Tricia Wright

EUROPEAN shares rallied broadly today, the first trading day of the new quarter, but the session might prove choppy ahead of euro zone and US manufacturing data.


The FTSEurofirst 300 was up 0.4pc at 1,157.19 by 0744 GMT, having fallen 0.5pc on Friday and posted its first quarterly loss in a year, mostly on concern of diminished monetary stimulus from the US Federal Reserve.

The market awaited PMIs for the euro zone and the United States today, seen stable at 48.7 for the currency bloc and slightly higher, to 50.5 from 49, in the United States.

"The main focus is on the data. People are probably building up their positions ahead of maybe a positive surprise, but overall I think you've got to be a little bit concerned about the topside," said Michael Hewson, analyst at CMC Markets.

The euro zone's blue-chip Euro STOXX 50 index, which is down around 8pc since late May, traded 0.5pc firmer at 2,614.75.

The index will face support at 2,578.78, which represents the 23.6pc retracement of the drop since late May, and will hit resistance at 2,533, the 200-day moving average that capped the index's rebound last week.

Above that, the next resistance will be at 2,673, the 50pc retracement.

Traders warned that gains could be kept in check by weak Chinese factory activity data which bodes ill for the second-largest economy.

"Chinese data overnight will not be helpful for European markets today and confirm my fears of an economic slowdown," said Lex van Dam, hedge fund manager at Hampstead Capital, which manages around $500 million in assets.

"Having said that today is the first day of the new quarter where market action is notoriously difficult to predict."


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