Europe midday: Stocks bounce on news of US-China contacts, dovish ECB
By Alexander Bueso
Date: Tuesday 13 Nov 2018
(Sharecast News) - Stocks in Europe are rebounding, helped by news of more fresh contacts between Chinese and US officials on trade and 'dovish' remarks from a top European Central Bank official.
Nevertheless, some analysts remained cautious, with IG's Chris Beauchamp telling clients: "After heavy losses in the US and Asia overnight, we have seen some small bounces for European markets. But the overall outlook remains cautious, after all tech worries seem to keep cropping up, putting the FANG stocks on the back foot.
"[...] While Europe has managed to bounce, US futures are already coming off their highs, suggesting that we have not seen the end of the selling just yet."
Critically, reports overnight indicated that US Treasury Secretary, Steve Mnuchin, and China's vice-premier, Liu He, had a telephone conversation last Friday and although no concrete proposals resulted from the meeting, Liu was now set to visit Washington D.C. in the near future.
As of noon, the benchmark Stoxx 600 was bouncing 0.43% or 1.55 points to 363.58, alongside a 0.78% or 88.03 points advance to 11,413.42 for the German Dax and a rise of 0.41% or 20.73 points to 5,079.82 for the Cac-40.
Milan's FTSE Mibtel was also higher, edging up by 0.09% or 17.43 points to 19,073.12.
From a sector standpoint, the Stoxx 600's Oil & Gas sector index was down by 1.63% to 326.73 as Brent crude continued to come under selling pressure.
In parallel, front month Brent crude oil futures were sliding 1.771% to $68.90 a barrel on the ICE.
Among other headwinds for the price of crude oil, overnight the International Energy Agency said oil use in automobiles was set to 'peak' over the next seven years.
In another noteworthy development, ECB chief economist, Peter Praet, reportedly said in London that "significant" stimulus was still required in order to support inflation.
On the economic front, the ZEW Institute's economic confidence gauge for November rose by 0.6 points from the month before to reach -24.1 , beating forecasts for a further dip to -25.0.
According to ZEW President, Professor Achim Wambach, recent economic data pointed to weakness in the country's growth over the third quarter, with a key expectations gauge pointing to no improvement over the next six months.
Still ahead on the economic calendar for later in the day, a meeting of the Italian government's Cabinet had been scheduled for 1900 GMT to study the European Commission's request that Rome revise its draft budget proposal for 2019.
In timely fashion, the IMF was expected to publish its Article IV consultation with Italy over coming days and to report to Italian officials on the conclusions of the report on Tuesday evening.
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