European stock markets are trading lower in a deep red territory during the early hours of trading. However, the markets are still on track to finish the week with solid gains. Thanks to Mr. Ben Bernanke who has delivered his well-prepared testimony on Wednesday and Thursday. In his testimony yesterday, he maintained the idea of playing down the tapering talk which pushed the US markets in another record close land.
The European officials are meeting in Moscow this weekend and there is a possibility that the QE agenda could be on the top of conversation, given the interest rates around the globe are increasing and the emerging markets are also constantly seeing an outflow of capital. The officials may want to use this opportunity and suggest some policies which can take an advantage of this outflow of capital from emerging markets to developed markets.
The volatility in the euro zone is also reducing its pace despite the political uncertainty in Spain. The country was able to sell their 12 month bonds more than anticipated at much lower. The same echo was heard in France who was also able to sell their bond auction at much higher demand despite a rating cut last week. Portuguese indices may be favored by risk loving traders after the country’s Prime Minister confirmed that the country’s GDP may have increased more than anticipated in the second quarter of this year.
The FTSE 100 index is also feeling the heat today on the back of no hopes for any further stimulus package. The sterling economy has already avoided the tripe dip recession and the incoming data is further supporting the strength in the economy. The retail sales data came in line with the forecast level of 0.2% despite the much blessed weather in the UK which convinced most of the buyers not to stay under the tube lights. The second quarter GDP figures are due next week, and only a weak number could put more pressure on the MPC voters to support the more aggressive quantitative easing.