Europe midday: Stocks at day’s highs amid positive economic data

Stocks are near their best levels of the day as traders pare back the ‘risk-off’ trades put on ahead of weekend and amid better than expected readings on industrial sector activity in Italy and Japan.

As of 1214 BST, the benchmark Stoxx 600 was ahead by 0.94% or 3.52 points at 379.03, alongside a gain of 1.07% or 131.48 points to 12,435.19 for Germany’s Dax and a 1.07% or 232.01 point advance in Italy’s FTSE Mibtel to 22,008.49.

Insurers were one of the best performing areas of the market after Hurricane Irma failed to meet the most dire predictions, potentially saving firms in the sector billions of pounds in the process, sending the Stoxx 600’s gauge for that sector up by 2.10% to 276.79.

On the geopolitical front, instead of another test missile launch, on 9 September, to mark the country’s ‘Foundation Day’, on Sunday the Hermit Kingdom held a celebration to honour the nuclear scientists and technicians involved in North Korea’s sixth and largest nuclear test, a week before.

That saw the US dollar recover a tad, although traders were wary of a negative reaction from Pyongyang should the UN Security Council approve new sanctions against North Korea on Monday evening.

Against that backdrop, Craig Erlam, senior market analyst at Oanda, commented: “The traditional safe havens are coming under some pressure this morning, a partial unwinding of the sizeable flows seen in recent weeks. Gold has come off its highest levels in more than a year this morning, gapping lower on the open in a sign of relief for traders, but still remains a very elevated levels which is representative of the risk environment we still find ourselves in.”

What economic data was to be had on Monday came in comfortably ahead of forecasts.

Thus, Italian industrial production edged higher by 0.1% month-on-month in July (consensus: -0.5%), buoyed by a 1.6% jump in orders for capital goods.

That prompted Fabio Fois at Barclays Research to tell clients he now saw upside risks of 0.25 percentage points to his call for Italian GDP to grow by 0.2% quarter-on-quarter over the three months to September.

Adding to the favourable sentiment, Chinese factory price data for August and Japanese core machinery orders for July, both of which were released overnight, printed ahead of forecasts.

Shares of insurers such as Munich Re and Hannover Re were trading higher in the early going as some observers hold out the possibility that damages from Irma may be less worse than initially feared.

Italy’s Fiat may spin-off its Magneti Marelli unit if it is unable to find a buyer for the component manufacturer before the close of 2018, Corriere della Sera reported.

Parmalat may pursue a bid for Australia’s Murray Goulburn Co-operative, according to Il Sole 24 Ore.

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