EU indices flat to negative as jobs data continues to weigh

European indices swung between flat to negative territory as Friday’s very poor US jobs data continued to weigh on sentiment. The FTSE 100 and DAX indices traded largely in flat territory and within tight trading ranges, whilst the French CAC lost 0.3% to start the week on the backfoot.

US non-farm payrolls were shockingly bad and reinforced fears that the US economic recovery is slowing quickly. Naturally this is therefore convincing some traders to refrain from adding too much risk to their portfolios as we head into the summer months where low volumes could make trading more volatile.

On the flip side to this point however is the fact that the FTSE 100 recovered most of the payroll induced sharp losses going into the close on Friday and with there being a lack of economic data due out today, this could certainly free up the hands of bargain hunters later in the session, particularly with the UK index trading at levels which have seen support in the past.

Sector-wise pricing trends paints a picture of defensive strategies being employed by traders. We have the pharmaceutical and tobacco sectors higher in trading, whilst gold prices have also seen support and are threatening to break out to new five-week highs above the $1550 level.These are all typical safe haven asset classes which traders traditionally seek in times of economic undertainty.

On the upside however is Glencore, the world’s largest listed commodities trader, whose shares have benefitted from a positive note from Deutsche Bank. The bank initiated the guidance on the stock with a ‘buy’ and a price target of 650p. Analysts at the bank stated their belief that ‘the stock will re-rate as the market gains more confidence in the sustainability of this business.’

On the downside were shares of Lloyds Banking Group, Hochschild and SuperGroup, with the latter falling 3.9% on fears that the fashion retailer may be losing its edge after giving online customers a 20% off voucher over the weekend. Naturally given the ‘super’, pun intended, share price rise since the IPO launched last year, where shares trebled, investors have been used to good news from the firm. However, since the last trading update disappointed, investors fear that the change of stance to offer discounts may be a sign of weakening demand. Shares have now fallen nearly 40% in the last month alone, trading below the psychologically important £10 level for the first time since September last year.

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