German optimism fuels Euro zone

US Consumer spending rose at its fastest pace in seven months according to figures presented yesterday.  The gauge in consumer spending indicates quicker economic growth, and would strengthen the case for the US Federal Reserve (FED) winding down it USD 85 billion bond monthly  bond buying program. Retail sales outside cars, gasoline and building materials rose 0,5 percent in July in line with expectations. Consumer spending is the biggest driver in the US economy.

A jump in Germany’s economic sentiment survey,  dovetailed with a rise in the industrial output in the euro zone and the fastest rise in house prices in England in seven years, bolstered renewed optimism also in the European region yesterday.  London’s FTSE, Germany’s DAX and the Paris CAC 40 indexes all climbed from 0,3 to 0,8 %%,  to lift the broad FTSE Eurofirst 300 index to its highest level since mid-May. US exchanges were rising on the retail figures yesterday after four loss making sessions.

 Euro/USD stood  at 1.3290 before the release of the US-retail figures added to the case for a cut in the Federal Reserve’s  (FED) stimulus already in September.  The American dollar is trading higher also in relation to Japanese Yen. USD/JPY is 98.01. Oil prices are  up with Brent crude at  USD 109,88 a barrel. Gold and silver stay at steady at last days  higher levels.

A renewed optimism  in the euro zone was yesterday reflected in the debt market. Yields on safe-haven German 10-year government bonds  hit their highest level in six weeks.  Risk premiums on Italian and Spanish bonds continued to ease.  A general improvement In the EU economy seems to take place. The question is when positive signs of improvement  eventually would take the Euro zone countries out recession and  into  sustainable economic growth. Gross Domestic (GDP) growth number expected to grew 0,2 %%  when the last quarterly report is published later on Wednesday.

The Asian market opened Tuesday in  strong positive territory helped by the Chinese data presented on Monday morning. The weaker Yen had the Nikkei stock exchange to jump 2,6 %%. The other Asian bourses were also up. The positive momentum is expected to continue this morning.

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