Despite a surprising drop in Eurozone industrial production, European stocks climb to a new high.
Investors saw European stocks climb to new highs on Wednesday, despite news that industrial production in the Eurozone fell more than expected. Eurostat reported that during October 2012 compared with October 2011, industrial production dropped by 3.6 percent in the Eurozone and by 3.1 percent in the broader 27-nation European Union (NYSEARCA:VGK). Economists had been expecting a less-significant decline of 2.4 percent in the Eurozone. On a month-over-month basis, seasonally-adjusted industrial production fell by 1.4 percent in the Eurozone and by 1.0 percent in the EU 27. Despite the bad news, the Euro STOXX 50 Index reached its highest level in over a year: 2,630 (NYSEARCA:FEZ).
The good news for investors came from Germany, where Destatis reported that between October and November of 2012, the consumer price index fell by 0.1 percent (NYSEARCA:EWG). Not considering energy prices, the rate of inflation has remained constant at +1.6 percent since October 2012. The inflation rate has not been below 2.0 percent since July. It is expected that the lower inflation rate in the Eurozone’s largest economy will allow the European Central Bank the opportunity to implement more monetary easing.
Britain had a bit of good news on Wednesday when the Office for National Statistics reported that November unemployment claims fell by 3,000 from October, decreasing by 20,900 on a year-over-year basis (NYSEARCA:EWU).
As of 11:06 EST, the Euro STOXX 50 Index advanced 0.23 percent to 2,630 – staying above its 50-day moving average of 2,521. In fact, the STOXX 50 is now at its highest point in over a year, having broken above its March 19 high of 2,608 (NYSEARCA:VGK). The FTSE 100 Index rose 0.25 percent to 5,939 (NYSEARCA:EWU). The German DAX Index advanced 0.28 percent to 7,611 (NYSEARCA:EWG). France’s CAC 40 Index climbed 0.05 percent to 3,648 (NYSEARCA:EWQ). Spain’s IBEX 35 Index surged 0.73 percent to 7,978 (NYSEARCA:EWP). Italy’s FTSE MIB Index jumped 1.23 percent to 15,777 (NYSEARCA:EWI).
As of 11:11 EST, the euro advanced 0.24 percent against the dollar, trading at $1.3036 (NYSEARCA:FXE). Bullish on the Euro
Spain’s ten-year bond yield declined to 5.38 percent on Wednesday from Tuesday’s closing level of 5.45 percent. Spain’s two-year bond yield dropped to 2.91 percent on Wednesday from Tuesday’s closing level of 2.98 percent (NYSEARCA:EWP).
Italy’s ten-year bond yield fell to 4.69 percent on Wednesday from Tuesday’s closing level of 4.74 percent (NYSEARCA:EWI).
In Japan, stocks advanced after the yen fell, making Japanese exports more competitively-priced in foreign markets (NYSEARCA:FXY). The big gainers were Mitsubishi and Canon. The Nikkei 225 Stock Average advanced 0.59 percent to 9,581 (NYSEARCA:EWJ).
In China, stocks advanced as the financial sector took the lead. Investors anticipate more construction financing ahead for development in western China. The Shanghai Composite Index advanced 0.39 percent to 2,082 (NYSEARCA:FXI). Hong Kong’s Hang Seng Index surged 0.80 percent to 22,503 (NYSEARCA:EWH).
American stock index futures were in positive territory ahead of Wednesday’s opening bell as investors (correctly) anticipated another round of quantitative easing to be announced after the conclusion of the FOMC meeting at 12:30 EST. The Dow Jones Industrials future advanced 0.12 percent to 13,294 as of 9:13 EST. The S&P 500 future rose 0.17 percent to 1,434 (NYSEARCA:SPY). The Nasdaq 100 future climbed 0.34 percent 2,695.
Bottom line: Wednesday’s trading session saw the Euro STOXX 50 Index climb to a new annual high, despite a decline in European industrial production as a slowdown in Germany’s inflation rate raised hopes of more monetary easing from the ECB.