Good morning!

Yesterday, European markets fluctuated between gains and losses, as after a negative opening we saw above expectations Manufacturing PMI and better than expected Spanish unemployment figures. Whereas the French Manufacturing PMI came out weaker than expected, and remained below the levels indicative of growth, the German figures surprised on the upside, and surpassed the 50 threshold that points to gains within the manufacturing sector; looking deeper, analysts pointed out that even as the German composite index increased, some components point to subdued demand as prices were slashed by most in two years and growth in new business slowed down. Of note, the French Manufacturing PMI continued to lag around 48, suggesting further contraction with worries further exacerbated by the fact that the country’s producers cut prices by most in five years. For the Eurozone, the same indicator reached 50.7, versus 50.3 a month earlier and expectations for a 50 reading; however, the growth in orders remains weak with data further showing that firms cut their staffing for the first time since November 2013 and that prices declined by most since February 2010. Even so, the European stocks find some relief in yesterdays’ statistics and reversed their downtrend, although at times they slipped again into the negative territory.

The positive momentum spread across the Atlantic, where the markets were also boosted by above expectations earnings of some companies, such as Caterpillar and General Motors. On the data front, yesterday was a mixed day with the house prices advancing by more than expected but Manufacturing PMI and unemployment claims failing to meet expectations. Nevertheless, the negative surprise in the latter was not significantly large and the four-weeks average, which is a smoother measure, continues to point to a strengthening labour market; indeed, the fact that US yields gained after the unemployment claims report shows that markets were not disappointed by the figures released yesterday.

In any case, the sentiment was hampered after markets closed by news that an Ebola case was reported in New York, marking the first such case in this city. In response, the US futures turned negative and at the moment we find the European futures pointing to a negative opening as well.

Today we will probably see speculation intensifying around the results of the Asset Quality Review (the results of which are due to be released on Sunday) as the day is otherwise light in statistics. On the political front, we are approaching the Brazilian Presidential Elections, the outcome of which remains apparently uncertain, and the Ukrainian Parliamentary poll. Furthermore, the EU Economic summit continues as do the budget debates, with countries such as France and Italy due to respond to the Commission’s queries.

Have a nice day!