European stock markets moved cautiously higher after a largely positive session in Asia. U.S. futures are narrowly mixed, oil prices are higher on the day. Japanese markets, in particular, rallied, on a weaker yen and as investors moved back into tech stocks after locking in gains. The CSI 300 underperformed and headed south, with commercial banks under pressure on the mainland and in Hong Kong after regulators said it is planning the introduction of quantitative indicators in the management of commercial banks' liquidity and the IMF suggested banks to increase capital buffers against a sudden downturn.
The DAX managed to move back above the 13000 mark and the automobile sector is recovering as the EUR holds below 1.18 against the dollar. The FTSE 100 underperformed and has erased most of its earlier losses as hopes for a Brexit deal ahead of next week's EU summit fade amid concerns about the stability of May's position. In Germany, the focus is on the SPD conference, where party members will decide whether to enter formal coalition talks with Merkel's CDU/CSU alliance.
German industrial production unexpectedly dropped -1.4% month over month in October and while September was revised up to -0.9% month over month from -1.6% month over month reported initially, it still leaves production down for a second consecutive month. The numbers look at odds with strong orders numbers and survey data, but indicated a buildup in the backlog of orders that also squares with PMI reports. This would suggest that the weaker than expected production numbers are not a sign of weakening growth momentum, but at least partly a reflection of the fact that companies seem to be running into capacity constraints, and while the annual rate fell back to 2.7% year over year from 4.1% year over year, the growth rates remain robust so far.
Spanish Home Price Inflation Accelerated
Spanish house price inflation accelerated to 6.7% year over year in the third quarter of the year, the highest annual rate since 2007. Anecdotal evidence also suggests that house prices are rising faster than anticipated and there are reports that U.K. buyers in particular are hitting the market in anticipation of Brexit, thus adding to the favorable impact of low-interest rates and above average growth in the region.
Eurozone Q3 GDP was confirmed at 0.6% quarter over quarter as expected and down from 0.7% quarter over quarter in the previous quarter. The annual rate was revised up slightly to 2.6% year over year from 2.5% year over year and the breakdown, which was released for the first time, showed surprisingly strong investment growth, with sizeable upward revisions to the second quarter.
This article was originally posted on FX Empire
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