The Week In Hindsight, 21 December 2013
The French economy lurched further into decline this week when Services and Manufacturing PMI’s showed the economy still struggling. Concerns over the French economy continue emerge amidst a global recovery that has seen even the most beleaguered euro nations report gains in output and declines in unemployment.
While the French economy took a step backward, the German ZEW Economic Sentiment survey showed investor confidence in Europe’s largest economy at a five year high. The up tick in investor confidence came despite a downgrade to the creditworthiness of the European Union by the ratings agency S&P. The European Union’s credit rating was slashed from AAA to AA- on Friday. The ratings agency cited concerns over euro members willingness to commit to funding the EU budget while alluding to the declining commitment to the union by certain member nations as an additional cause for concern.
The week’s releases drove the euro lower against its major counterparts while doing little to deter equity indices. The DAX, CAC40 and IBEX 35 each closed up on the week while threatening to round out the year on new highs.