European stocks lose ground heading into US GDP

<p>European indices lost ground on Friday as investors eyed the all important first reading of third-quarter US GDP. Generally we have seen traders turn more […]</p>

European indices lost ground on Friday as investors eyed the all important first reading of third-quarter US GDP.

Generally we have seen traders turn more cautious by removing elements of risk from their portfolio’s as we head into the afternoon and the important US GDP figure.

There is a slight worry that US GDP could track a similar tone to that of the UK’s third quarter GDP announced earlier this week by proving to be more resilient than anticipated. This could have a knock on effect to the amount of stimulus the Fed may be looking to announce next week.

The morning trade has been a battle between strength in energy firms and mining weakness. With mining firms falling by over 2% in early trading, this is weighing on the gains energy firms have posted thus far contributing to a fall of as much as 30 points on the FTSE 100 this morning.

Most of the gains in energy firms have been dictated by the recent strength in earnings posted by Shell, Exxon Mobil and Total. To add to this, BP shares have nudged higher after a US Presidential panel said that Halliburton, a contractor for BP in the Gulf of Mexico, used flawed cement in the infamous Macondo well blowout.

Weighing on European Indices however is the mining sector, which is suffering from the stronger US Dollar and falling metal prices. This is also a sector that could potentially be under threat of a sell off should US GDP rise more than expected this afternoon, as this could rally the US Dollar which would pressurize metal prices further.

As such, we have seen investors recycle funds out of the miners today as a precaution.

Build your confidence risk free
Join our live webinars for the latest analysis and trading ideas. Register now

StoneX Financial Ltd (trading as “City Index”) is an execution-only service provider. This material, whether or not it states any opinions, is for general information purposes only and it does not take into account your personal circumstances or objectives. This material has been prepared using the thoughts and opinions of the author and these may change. However, City Index does not plan to provide further updates to any material once published and it is not under any obligation to keep this material up to date. This material is short term in nature and may only relate to facts and circumstances existing at a specific time or day. Nothing in this material is (or should be considered to be) financial, investment, legal, tax or other advice and no reliance should be placed on it.

No opinion given in this material constitutes a recommendation by City Index or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person. The material has not been prepared in accordance with legal requirements designed to promote the independence of investment research. Although City Index is not specifically prevented from dealing before providing this material, City Index does not seek to take advantage of the material prior to its dissemination. This material is not intended for distribution to, or use by, any person in any country or jurisdiction where such distribution or use would be contrary to local law or regulation.

For further details see our full non-independent research disclaimer and quarterly summary.