Most major European stock indices fell into the red on Friday following bad news from Germany – the nation with the Eurozone’s largest economy.
Bad news from Germany came from two sources on Friday. Most major European stock indices declined following the reports (NYSEARCA:VGK). Destatis reported that Germany’s industrial production declined by 2.6 percent in October on a monthly basis. September’s industrial production decline was adjusted upward to indicate a mere 1.6 percent drop. This news was in stark contrast with Thursday’s report from Destatis that Germany’s factory orders surged in October by 3.9 percent on a month-over-month basis (NYSEARCA:EWG).
Germany’s Bundesbank issued this disappointing report concerning its economic growth estimate for next year:
Against this background, the Bundesbank’s semi-annual forecast expects that, following a rise of 0.7% in the current year (0.9% after adjustment for calendar effects), real gross domestic product (GDP) will grow by only 0.4% (0.5% after calendar adjustment) next year. In 2014 real GDP could go up by 1.9% if the euro-area banking and sovereign debt crisis does not escalate further and uncertainty among investors and consumers gradually subsides.
Britain’s Office for National Statistics reported that industrial production in the U.K. fell 0.8 percent in October on a monthly basis. On a year-over-year basis, the nation’s industrial production sank by a whopping 3 percent. Manufacturing dropped 2.1 percent over the same period.
As of 11:13 EST, the Euro STOXX 50 Index declined 0.32 percent to 2,595 – staying above its 50-day moving average of 2,514 (NYSEARCA:VGK). The FTSE 100 Index advanced 0.09 percent to 5,907 (NYSEARCA:EWU). The German DAX Index declined 0.43 percent to 7,502 (NYSEARCA:EWG). France’s CAC 40 Index dipped 0.07 percent to 3,599 (NYSEARCA:EWQ). Spain’s IBEX 35 Index fell 0.80 percent to 7,847 (NYSEARCA:EWP). Italy’s FTSE MIB Index sank by exactly one percent to 15,677 (NYSEARCA:EWI).
As of 11:21 EST, the euro declined 0.15 percent against the dollar, trading at $1.2951 (NYSEARCA:FXE).
Spain’s ten-year bond yield declined to 5.45 percent on Friday from Thursday’s closing level of 5.47 percent. Spain’s two-year bond yield dipped to 2.96 percent on Friday from Thursday’s closing level of 2.97 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield declined to 4.57 percent on Friday from Thursday’s closing level of 4.61 percent (NYSEARCA:EWI).
On London’s ICE Futures Europe Exchange, January futures for Brent crude oil declined by 14 cents (0.13 percent) to $106.12/bbl. (NYSEARCA:BNO, NYSEARCA:USO). Weighing the Risks in International Oil Plays
December Gold futures advanced by $3.10 (0.18 percent) to $1,703.40 per ounce (NYSEARCA:GLD). Gold Turns Higher Despite Negative Economic Forecast
In China, the Shanghai Composite Index jumped 1.60 percent on high volume to 2,061 as the nation’s Securities Regulatory Commission discussed ways to facilitate financing for brokerage frims (NYSEARCA:FXI). Hong Kong’s Hang Seng Index declined 0.26 percent to 22,191 (NYSEARCA:EWH). Update on Yield Chasing — Genghis Bond Edition
In Japan, stocks declined after the Nikkei Stock Average Volatility Index fell 2.6 percent to 16.94, signaling that the market is overbought. The Nikkei 225 Stock Average declined 0.19 percent to 9,527 (NYSEARCA:EWJ).
American stock index futures were in positive territory ahead of Friday’s opening bell, as a result of the shockingly upbeat non-farm payrolls report from the Bureau of Labor Statistics. The December 12 Dow Jones Industrials future advanced 0.41 percent to 13,117 as of 9:13 EST. The December 12 S&P 500 future rose 0.33 percent to 1,417 (NYSEARCA:SPY). The December 12 Nasdaq 100 future climbed 0.45 percent 2,666.
Bottom line: The major European stock indices retreated on Friday following bad news from Germany: Industrial production sank 2.6 percent during the month of October and the Bundesbank’s economic growth forecast for 2013 sank from 1.6 percent to a mere 0.4 percent.