22 February 2012 at 14:25 GMT
European PMI figures sink stocks
January's PMI figures in Europe were a pleasant surprise as they showed that the Eurozone was stabilising and even expanding slightly in the services sector. Today's February figures however crushed (at least in the short-term) any hope of momentum. Eurozone PMI manufacturing advance figures for February came out at 49.0, missing estimates of 49.4 but slightly up from 48.8 in January. The figures still signal a small contraction in the economy. Eurozone PMI services advance figures for February came out at 49.4, missing estimates of 50.6 and down from 50.4 in January.
While the figures show stabilisation compared to the figures we saw back in October 2011 when the Euro debt crisis escalated at full speed they are still not moving enough in the right direction to really avoid a mild recession. Europe is thus still stuck in a thick fog with poor visibility and one main hope of European politicians must be for an acceleration in the US economy. In the short term this is a rather distant hope and therefore Europe seems unable to gain any help in reigniting its own growth.
Stocks are of course being dumped in today's session with the Stoxx 600 down 0.7 percent driven by financials. S&P 500 Index futures are currently down 0.2 percent ahead of the open and we expect minimal action with only US existing home sales for January expected (15:00 GMT) to come out at 4.66 mn, slightly up from 4.61 mn in December.
After the US close, HP is expected to report earnings and with Dell's EPS miss yesterday there is a downside risk to EPS consensus estimates for HP.