EU Economic Update – 17 November 2014

European equity markets close the week lower on growth concerns

Most European equity markets closed fractionally lower last week as concerns over both continental and Chinese growth mounted.

While Chinese economic data initially held up well when inflation numbers for October came in as expected at 1.6%, representing no change from the previous reading, the positive news was not to last. This was as industrial production data released later in the week highlighted a sharp contraction in activity when the headline reading came in at 7.7% against expectations for growth of 8%.  

In addition to concerns over the Chinese economy, uncertainty also built throughout the week over US retail sales and GDP figures for Europe’s two largest economies which were each due on Friday.

While these survey measures either met or outperformed against expectations, this only helped markets to partially pare losses as investors began to focus instead, upon the potential for a weak start to Q4 from the world’s problem economies.

In detail; French GDP for the third quarter outperformed the most when it came in at 0.3% against expectations for growth of just 0.1%. This was while Germany also avoided recession when Q3 GDP came in at 0.1% against official projections for a reading of 0.1%.

In addition to this, German final CPI suggested that prices continued to fall in the euro-zone’s largest economy, while French final CPI also surprised to the upside when it held steady at 0.0% against forecasts for a decline of -0.1%.

On the downside the, the Italian economy slipped back into recession during the third quarter when GDP contracted by -0.1%, ensuring that investor concerns over the potential for contagion remain valid; therefore placing the ECB under continued pressure to do more to boost the ailing continent.

DAX (Black), CAC40 (Red), IBEX 35 (Blue)

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