Industry Sector Weekly

Equities remained in a range the past week, with the Stoxx 600 index ending 2% higher. Although financial markets remained fragile, some positive economic data releases supported sentiment and raised hopes that the global economic recovery will continue to gain momentum. Positive economic data support sentiment

Equities remained in a range the past week, with the Stoxx 600 index ending 2% higher. Although financial markets remained fragile, some positive economic data releases supported sentiment and raised hopes that the global economic recovery will continue to gain momentum. In particular, German factory orders climbed 2.8% in April and were up nearly 30% on the year. Moreover, trade data from the US and, in particular, China suggested global trade activity is strong.

Some downside risks, however, remain. The risk of overheating in China cannot be discounted and could lead to weaker demand for US and European exports, as well as commodities, if policymakers resort to further measures to slow the economy. In addition, Greece’s economic problems have acted as a catalyst for wider sovereign debt risks across Europe and, indeed, most advanced economies, leading to risks of losses in the financial sector steaming from weaker domestic demand.