The Week In Hindsight, 24 January 2014
France upstaged Germany in the economic data department this week with both Services and Manufacturing PMI surveys coming in ahead of forecasts following a recent run of poor performance.
The figures still point toward a contracting French economy although the pace of that contraction is thought to have slowed throughout December. This was while German PMI numbers showed both manufacturing and services activity expanding, although the Services PMI did marginally under perform against forecasts.
The continental data follows a good start to the year across European equity markets which have been buoyed by improving sentiment toward prospects for peripheral economies. In addition to modest improvements in economic numbers, Bank of America Merrill Lynch noted in a statement to investors this week that there has been a marked increase in the number of investors turning to European equity fund investments. The bank reported over $5 billion of inflows throughout the past week alone.
This heralds yet another positive step in the continental healing process that investors are now beginning to view Europe as an opportunity. This is a positive move for those already invested there and bodes well for those considering a late entry, particularly when factoring in that rates are still falling in Europe, which is naturally a positive driver for stocks.
The next major event for European economies is the IFO survey of German business confidence on Monday followed by the German constitutional court ruling on the legality of Europe’s equivalent to QE on Tuesday.