The FTSE 100 ended the week in negative territory as investors sifted through a batch of economic data and weighed developments in China and Greece. Early in Friday’s session, a report showed UK construction output rose 2.6% year-on-year in June, missing analysts’ estimates for a 3.3% gain.
European equities fell on Friday after as a series of economic reports showed the Eurozone’s economic recovery lost momentum in the second quarter. The euro tumbled 0.45% and 0.47% against the dollar and the pound respectively and lost 0.53% against the yen, while Brent crude dropped 0.86% to $48.80 a barrel.
Early on Friday, the Greek parliament has approved a draft third bailout of about €85bn, which includes tax rises and spending cuts. Eurozone finance ministers are discuss the terms of the bailout, with the agreement expected to be approved despite some opposition from Germany.
European equity markets have made no serious attempt to recoup the losses that were sustained at the beginning of the week, and if sentiment can’t be boosted on the back of the Greek deal, we could see another move lower.
There was more uninspiring news of Eurozone growth figures, which showed the economy grew at a slower-than-expected pace in the second quarter.
According to figures published by the European Union’s statistics office in its first estimate, GDP in the 19-country bloc grew 0.3% quarter-on-quarter in the three months to the end of June, which represents a 1.2% climb year-on-year
US equities edged higher early on Friday, as investors analysed a number of economic reports on industrial production and consumer sentiment.
According to figures published by the Federal Reserve, industrial output rose 0.6% last month, driven by a 10.6% surge in autos production. The figure was above the 0.3% increase analysts had expected signaling that a September rate hike is coming.” US producer prices rose 0.2% in July from June, when they were up 0.4%, according to data released by the Labor Department. This marked the third straight monthly increase and came in below analysts’ expectations of a 0.1% rise.
Meanwhile, the University of Michigan index slipped from 93.1 in July to 92.9 in August, broadly in line with expectations. The turbulence in equity markets meant that gold had a strong week, with a five-day gain of $21. Commodity markets were gloomy with copper hitting a six year low and oil prices hard hit also at a six year low of $41.35 a barrel. .