European Markets Wrap: PMI Beats, Dollar Holds as Risk Sentiment Remains Cautious
By Justin Low, via ForexLive (original article on TradingView)
European trading wrapped up on a balanced note as economic data offered mixed cues and investors maintained a cautious tone amid lingering macroeconomic uncertainties. A slew of flash PMI data from across European economies shaped market sentiment early in the session. Meanwhile, the US dollar remained on steady footing as risk appetite showed limited signs of improvement.
Here is an in-depth look at the key developments from the European session on April 23, 2024.
Flash PMI Results Lead the Headlines
The main highlight of the session came in the form of preliminary Purchasing Managers’ Index (PMI) data for April from the Eurozone, Germany, France, and the UK, offering the latest snapshot of economic activity in the region.
Key PMI Results:
– Eurozone Services PMI: 52.9 vs expected 51.8
– Eurozone Manufacturing PMI: 45.6 vs expected 46.5
– Germany Services PMI: 53.3 vs expected 50.5
– Germany Manufacturing PMI: 42.2 vs expected 44.6
– France Services PMI: 50.5 vs expected 48.8
– France Manufacturing PMI: 44.9 vs expected 46.8
– UK Services PMI: 54.9 vs expected 53.0
– UK Manufacturing PMI: 48.7 vs expected 49.0
While services sector data largely beat expectations, pointing to ongoing resilience in consumer-facing areas, the manufacturing side remained under pressure. Output rankings in the industrial sector disappointed, with Germany’s and France’s factories continuing to show contraction. However, the better-than-expected figures for services gave a modest lift to investor sentiment in early trading.
Overall, euro area composite output stayed above the key 50.0 growth threshold, supported by a firmer bounce in services activity. Yet concerns lingered over the ongoing manufacturing slump, which could weigh on broader economic recovery efforts in the single currency bloc.
Market Reaction Across Assets
Forex Markets
The euro initially climbed following stronger services PMI prints but later trimmed gains after the weak German and French manufacturing reads undercut the optimism. EUR/USD traded as high as 1.0685 early in the session before reversing back below 1.0660.
– EUR/USD: Struggled to maintain gains; last seen around 1.0650
– GBP/USD: Edged higher to 1.2440 as UK services PMI surprised positively
The dollar, despite dollar-denominated risk assets being broadly mixed, held its own against most major currencies, with haven demand and soft risk appetite in the background providing support. Investors declined to offer up strong risk buying, keeping gains in high-beta currencies limited.
Equity Markets
European equities were mostly flat to slightly lower throughout the day. Broad hesitation remained as traders assessed the geopolitical landscape, upcoming corporate earnings, and macroeconomic indicators.
– Euro Stoxx 50: Down 0.2 percent
– German DAX: Dropped 0.3 percent after poor manufacturing PMI
– UK FTSE 100: Rose 0.1 percent on strong UK services PMI
– French CAC 40: Held nearly unchanged
The market’s tone suggested investors were unwilling to engage strongly in risk assets ahead of key events towards the US session and later in the week, including earnings releases from major US tech firms and potential headlines from the US Federal Reserve.
Bond Markets
Eurozone bond yields edged lower, particularly in Germany, as weak manufacturing figures stoked mild concerns over growth momentum and helped boost demand for sovereign debt.
– German 10-year bund yield: Fell by approximately 4 basis points
– French 10-year OAT yield: Down around 3 basis points
The decline in yields highlights that despite robust services readings, the persistent industrial slowdown remains a pressing concern, and investors
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