Stock Market News (European Open) – Europe on the rise, gains though limited; Chinese equities partially recover – XM (blog)

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Andreas Georgiou, XM Investment Research Desk

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Major Asian benchmarks edged higher for the most part today, though their gains were contained. In Japan, the Nikkei 225 and the Topix finished the day up by 0.1% and 0.2% respectively, both rebounding from a 0.6% decline earlier in the day. The two benchmarks are up on the week – their tenth weekly gain in eleven – after the fall in the week that preceded. Following yesterday’s selloff on the back of government efforts to reduce financial risks such as excessive leverage and fears the decline in bond markets would spread into equities, Hong Kong’s Hang Seng and the Shanghai Composite advanced by 0.5% and 0.1% respectively. Australia’s S&P/ASX 200 lost 0.1%.

UK Prime Minister Theresa May will be in Brussels today for Brexit talks with developments definitely having the capacity to move markets. Also in focus, is the prospect of a coalition in Germany that would give Angela Merkel the majority government she wishes. In a U-turn, the Social Democrats are now coming to the table after previously ruling out another coalition with Merkel’s Christian Democrats.

In Europe, most major indices were in the green during morning trading, though similar to Asia their gains were limited. At 0921, the Stoxx 600 traded 0.1% higher. The pan-European index is currently trading up 0.9% on the week and is well on track to post a weekly gain after declining in the two previous weeks. The blue-chip Euro Stoxx 50 was higher by 0.3%.

Consumer staples were the best performing industry sector within the Stoxx 600 after China announced it would cut import tariffs on some consumer products.

The UK’s FTSE 100 was 0.15% down, the German DAX was up by 0.2% and the French CAC 40 traded higher by 0.25%.

Upbeat November flash PMI figures out of the eurozone yesterday supported the view that eurozone economies are having their best performance in years during 2017, though a strengthening euro could be acting as a drag on exporter-heavy European benchmarks. Euro/dollar last traded above the 1.1860 handle, at its highest in two months.

Italian banks BPER Banca, UBI Banca and Banco BPM led gains within the Stoxx 600 and the Italian FTSE MIB (up 0.5%) with gains ranging from 5.4% to 4.7% in the order written. Banco BPM was on the rise despite Barclay’s cutting its price target to 3.80 euros from 4.15. Its stock price last traded at 2.85 euros.

Healthcare was the worst performing Stoxx 600 industry sector with Mediclinic International (down 1.9%) leading the sector’s losses as well as being the worst underperformer within the FTSE 100 after Deutsche Bank cut its target price on the company.

Dow, S&P 500 and Nasdaq 100 futures all last traded higher by 0.05%, 0.1% and 0.05% respectively. US President Donald Trump yesterday made reference to “big, beautiful fat tax cuts” in his Thanksgiving message to the American people. Serious deliberations on the topic, which has been a major driver of sentiment for months, are expected to continue next week though. The US will today see the release of November preliminary Markit manufacturing and services PMIs at 1445 GMT. Today is Black Friday in the US with big retailers such as Amazon battling for consumers’ attention.

Thin trading is expected in the US with markets opening today for a shortened session following yesterday’s holiday.

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