European Stock Markets

On June 8, the mood of players in the market of European government bonds was changing during the day, which ultimately led to the formation of a mixed price movements for most of the trading session. The mood of investors was formed mainly under the influence of macroeconomic statistics in Europe.

Statistics of the euro zone, published on Monday, showed growth of investors’ optimism. According to the German research group Sentix, optimistic sentiment of European investors reached the maximum in June of this year. Instead of the expected growth to minus 31.0 points, the rate soared from minus 34.3 points to minus 27.0 points in May.

According to experts Sentix, the main factor in the growth of optimism in business circles in Europe has been the improvement of macroeconomic statistics, released recently in the countries of the euro zone. Against the backdrop of slowing economic downturn, confidence in the region is growing that the worst times of recession are behind us and the beginning of the restoration of economic growth is not far off.


An additional factor that stimulated the optimistic tone of market participants became macroeconomic data, released in Germany. The Federal Statistics Office in Wiesbaden reported that the volume of Factory Orders in April of this year had not changed in comparison with that of the previous month. In annual terms it fell by 37.1%, while the predicted decline was 33.0%. In the statement the Ministry of Economy of Germany said that the medium-term prospects for the development of the German economy looked much better.

Thus, expectations that the European economy is ready for the start of reconstruction are stepping up the sale of debt obligations of European governments. At the same time, the players prefer to make predictions for short-term outlook, where apparent improvement in the economic situation is not expected. Therefore, by the end of the trading session the short-term debt securities of most European governments showed increase in price as opposed to long-term securities, which fell on the basis of quotes of the day. The leading benchmark of European government bonds showed the following results half an hour before the closing of trading session: yield of 2-year German Bunds rose by 5, 10-year-olds dropped by 4. Spread between 2-year-old and 10-year German Bunds has shrunk from 204 to 195.


According to analysts, the rally in global equity markets may continue until the end of June, as the month is the final one for the second quarter. Consequently, the desire to complete the quarter with the high rates will be determinative for many investment funds. In addition, the yield of long-awaited positive macroeconomic indicators, giving reason to believe that the “bottom” of economic decline of the European region is reached and the beginning of the process of economic recovery is not far off, no doubt, will further catalyze the growth of prices in world stock markets.

European Stock Markets