Markets gain ground despite mixed eurozone GDP data

A raft of inconsistent GDP readings out of the eurozone have done little to dampen bullish sentiment in the region. Meanwhile, Barclays has fallen despite a sharp rise in profits, as high expectations prompt a sense of disappointment.

• European markets rise, despite mixed GDP readings.

• Eurozone inflation less worrisome when stripping out huge reversal in energy prices.

• Barclays falls as traders look beyond rise in profits.

European markets are looking set for a positive finish to the week, with a largely pessimistic tone in Asia being brushed aside despite a somewhat mixed batch of GDP figures out of the eurozone. The economic recovery was always likely to be uneven in nature, and this morning's growth figures highlighted exactly that. The uneven timing of lockdown measures within the region has resulted in a wide disparity between German (-1.7%) and French GDP (0.4%). That weakness in German growth highlights one notable reason for the recent DAX underperformance. However, the story of a lagging EU could soon start to shift, with the region expecting to ramp up their vaccinations to fully cover 70% of the population by mid-July.

Rising eurozone inflation highlights the growing pressure being placed upon central banks, as the CPI reading moved up to 1.6% for April. Continued insistence that loose monetary policy will remain in place for an extended period of time has helped sustain a positive outlook for markets. However, once we see inflation top the 2% mark, there is likely to be greater pressure to see that trajectory come down once again. Nonetheless, the divide between core and headline inflation does provide the basis for a more relaxed ECB, with the core reading of 0.8% highlighting that we are comparing prices to a month when crude oil capitulated to a historic negative reading last April.

Earnings season continues to play a key role in market sentiment, with Twitter (-11%) and Amazon (+2%) continuing the largely mixed role of tech over the course of the week. In the UK, Barclays have failed to live up to the expectations set by a raft of better-than-expected releases from the sector. A 167% rise in profits was not enough to stop the bank from trading heavily in the red, with the bank largely leaning on reduced bad loan provisions to make up for falling income across credit card, corporate, investment, and international divisions.

Ahead of the open we expect the Dow Jones to open 52 points lower, at 34,008.