Monday, September 02 09:18:33
The ISEQ is significantly higher this morning at 4,230, up 40 points as the US is closed but Europe is very much awake as both China and Eurozone stats come in above expectations.
Davy Stockbrokers talks about the focus on the Eurozone and the importance of today's data:
With US markets closed today, attention will focus on euro-zone PMIs. Final manufacturing PMIs for August should reveal further improvement in conditions across the euro-zone, leaving the composite number at 51.3.
This points to a second consecutive quarter of growth in the euro-zone in Q3, following the 0.3pc rise in Q2. But the recovery in the region remains very much a 'core' story. With the notable exception of Portugal, core countries provided the bulk of the growth in euro-zone GDP in Q2.
While most core countries move into primary surplus next year, the periphery will remain mired in austerity, as governments in Italy and Spain struggle to balance their books. The stock of debt as a percentage of GDP peaks in Ireland this year, but below trend growth in other countries means a further rise in debt levels in 2014. Consumer spending and investment is forecast to fall again in 2014 in most peripheral nations, as austerity continues.
One good news story in the periphery has been the strength of exports. The harsh internal devaluation, particularly in Greece, has meant that lost competitiveness has been regained vis-à-vis Germany since 2008. This has helped exports, and pushed the current account into positive territory in many peripheral countries.
The problem is that the Germans have also gained even more competiveness, illustrated in a current account surplus of 7pc of GDP. While Germany remains a low-inflation and high-savings nation, the rebalancing of the euro-zone will remain elusive and the recovery very much a coredriven story according to Davy Stockbrokers.