European stock markets are under pressure, following on from losses in Asia and U.S. stock futures also heading south. Investors are disappointed that the first press conference of the incoming U.S. administration brought no real clarification of fiscal and economic policies and markets have returned to a wait and see mode, with risk aversion picking up, while the dollar is under pressure. Drug makers in particular seem to be under pressure in Europe this morning, after slumping in the U.S. following comments from Trump during his press conference which implied that Drug companies has a lot of lobbyists and the U.S. was paying too much for drugs it makes. Trump said he will force the industry to bid for government business going ahead. The FTSE is halting the record streak of 12 straight daily gains and is retreating slightly from record highs.
Crude rallied to four-session highs of $52.99, with gains driven by the sharp post-Trump presser dollar losses. In addition, OPEC members are reportedly keeping to their output cut agreements so far, with Kuwait and Iraq saying they are in-line with their cuts, while Saudi has apparently informed some of its customers of delivery reductions.
Italian yields drop in 2019 and 2023 auctions, but the overall result was mixed and while the shorter dated auction was underpinned by the ECB’s expansionary policy and ongoing QE purchases, the longer-term auction showed a rise in yields. Italy sold EUR 3 billion of 2019 bonds with a coupon of 0.05% at an average yield of 0.06%, down from 0.3% at the previous auction.
German 2016 GDP growth accelerated to 1.9% from 1.7%, above consensus of 1.8%. Adjusted for calendar factors growth accelerated to 1.8% from 1.5% in 2015. The Statistics Office said growth was driven by domestic demand, with private consumption up 2.0% and public consumption rising 4.2%, with the latter fueled predominantly by the refugee influx. Overall consumption rose 2.5% and remained the main driver of growth, although Destatis also reported an encouraging pick up in investment, with construction investment up 3.1% and machinery and equipment investment rising 1.7%. Stock changes and net exports meanwhile detracted from overall growth, which should go some way to quieten critics arguing that Germany is relying too much on exports to boost growth.
Eurozone November production jumped 1.5% month over month, more than expected and with October data revised up to 0.1% month over month from -0.1% month over month, the annual rate lifted to 3.2% from 0.8% in the previous month. More signs then that Q4 GDP growth was robust, which was already indicated by full year German GDP numbers this morning, which showed growth rising to 1.8% on a working day adjusted basis last year, from 1.5% in 2015.