Market update: At the end of the week, a more sanguine mood returns to markets

Eurozone concerns once again led Wall Street stocks lower on Thursday (Dow Jones 0.3%, S&P 500 0.2%). Comments by the European Central Bank president that the (euro) exchange rate was important to growth and price stability were interpreted as bearish and a risk-off mood soon set in, helped further by disappointing weekly jobless claims and fourth quarter production data. Among the weakest performers in the S&P 500 were growth sectors, although housing stocks also declined. On a positive note, top US retailers reported strong January sales.

Signs of gathering momentum in the Chinese economy helped most major bourses in Asia overnight, although Japanese stocks bucked the trend and closed lower (Shanghai Composite +0.6%, S&P/ASX 200 (Australia) +0.7%, Nikkei 225 1.8%). China’s imports and exports jumped sharply ahead of expectations, at 28.8% and 25.0% year-on-year respectively, boosting confidence in regional markets, which has spilled over to Europe this morning (FTSE Eurofirst 300 and FTSE 100 both up 0.6% at the time of writing). In another development overnight, European leaders came close to securing a €960bn budget deal that represents a large reduction from the original proposed €1,033bn.