European markets gain ground on bargain hunting

European markets posted gains after European Indices fell between 2%-3% in the last two trading days. However, volumes are low as it is a Friday and so therefore there is very little that we can read into today’s move higher.

One sector that bore the brunt of the recent selling is the miners on fears of more aggressive interest rate hikes in emerging markets such as China where metal demand is very high. The mining sector itself has fallen almost 7% in the last two days and naturally therefore those investors hunting bargain stocks are targeting this area in particular today.

That said, buying activity in the miners is not by any means large and this emphasises the nervousness and uncertainty that investors may have become over emerging market metal demand in the near to medium term. The weekend could be a good opportunity for investors to pause and re-evaluate earnings potential in the miners after the data this week.

RBS higher on early exit from APS speculation
We have seen higher buy side volume in shares of Royal Bank of Scotland today after speculation that the publicly owned bank may make an early exit from the Asset Protection Scheme. Investors are taking the market takl as an important sign of renewed confidence that the bank may no longer require the additional insurance that the APS gives it against its riskier assets and of the additional savings RBS could make from an early exit.

Retail stocks turn weaker after worst retail sales for December on record
Investors continued to sell out of their holdings in retail stocks today after data showed that Britain’s retailers suffered their worst December on record after a bigger than expected slump in sales. UK Retail sales fell 0.8% last month when the market had expected a fall of 0.3% but Novembers sales were revised higher to 0.4%.

Whilst the bigger than expected drop in sales is disappointing, it is not sufficient to add too much to existing sales concerns amongst the UK’s retailers considering the impact of the terrible weather conditions experienced over the month. Investors are likely to need to see consistent drops in sales activity before they become convinced that shoppers are increasingly starting to stay at home