European stocks lose ground heading into US GDP

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.