European Shares Slip but the FTSE Bucks the Trend

European stock markets are mostly down on the day. The DAX tried to move higher in opening trade, but quickly headed south from an intraday high of 13094 as profit-taking set in. The FTSE 100 was hanging on to marginal gains largely thanks to a weaker pound, but overall risk aversion has picked up again. Most Asian markets closed in negative territory as the boost from U.S. tax reform plans abated and the shift out of tech stocks continued. The ASX also struggled with the RBA left rates on hold and investors continued to sell the banks. A slump in industrial metals dragged miners lower and disappointment over the failure to reach a Brexit deal on early trade and transition talks weighed on sentiment in Europe, even if the weaker pound helped to limit losses in the FTSE 100.

In the Eurozone strong PMI data confirming ongoing job creation amid strong orders growth did little to prevent a sell-off in stock markets as retail sales disappointed and Brexit and ongoing uncertainty over the political situation hang over markets. U.S. stock futures are narrowly mixed, oil prices are slightly down on the day.  The Euro is nearly unchanged versus the greenback while the pound is weaker.

Eurozone retail sales dropped -1.1% month over month in October, which was more than anticipated and bringing the annual rate down to just 0.4% from 4.0% year over year in the previous month. The three months rate decelerated to 0.1% from 0.5% in the three months to September. A confirmation that sales slowed in October, although with consumer confidence jumping higher in November and survey data suggesting an acceleration in employment growth in the last quarter of the year, consumption trends should continue to support overall growth, even if retail sales numbers for October were somewhat disappointing.

Eurozone services PMI Increased from October

Eurozone Services PMI confirmed at 56.2, up from 55.0 in the previous month and in line with the preliminary reading, the composite was confirmed at 57.5, up from 56.0 in October. Strong numbers, with Markit reporting a strengthening of economic expansion across the big-four Eurozone countries with output growth accelerating to the fastest in over six-and-a-half years. Job creation hit a 17-year peak and price pressures intensified.

Japan’s service sector activity grew at a slower pace in November due to a slowdown in outstanding business, but new orders remained relatively strong. The Markit/Nikkei survey released on Tuesday showed its Japan Services Purchasing Managers Index (PMI) fell to 51.2 on a seasonally adjusted from 53.4 in October, which was the highest in 26 months. The index for outstanding business fell to 50.6 from 51.5 in the previous month to the lowest level since February. But the pace of new business was largely steady, dipping only marginally to 53.7 from 53.8 in October. The composite PMI, which includes both manufacturing and services, fell to 52.2 from 53.4 in October.