Europe open: German stocks move towards record highs on trade headlines
By Alexander Bueso
Date: Wednesday 22 Jan 2020
(Sharecast News) - Headlines of a possible trade deal between the US and European Union and positive assessments of the threat of a new coronavirus in China sent shares higher in early trading, although stocks on the euro area periphery remained under pressure.
In remarks made at the World Economic Forum in Davos, the US President said that he was confident that Washington would clinch a big deal on trade with Brussels.
And ahead of a World Health Organisation meeting to decide whether a new coronavirus in China justified a public health emergency, investors appeared to be calmer than on Tuesday, with various commentators arguing that the new sickness was for now similar to the typical flu.
"Investors still appear to be in 'buy the dip' mode and as such today's rebound in Asia markets looks set to translate into a positive open here in Europe as well as a new record high for the German DAX when it opens in a few hours' time," said Michael Hewson, chief market analyst at CMC Markets UK.
Hewson also highlighted positive South Korean economic data released overnight, which portended a positive outlook for the global economy in 2020.
As of 0854 GMT, the benchmark Stoxx 600 was adding 0.11% to 423.86, alongside a rise of 0.24% to 13,587.99 for Germany's Dax and an advance of 0.05% to 6,048.14 on the French Cac-40.
According to Paul Ashworth at Capital Economics, the mortality rate of the so-called Wuhan virus was closer to that of the seasonal flu, and not to the 2003 SARS epidemic, and on a lesser scale even.
As if on cue, the Stoxx 600 sector gauge for Travel&Leisure shares was flat.
Milan's FTSE Mibtel on the other hand was 0.36% lower to 23,758.24 amid reports that the leader of one of the governing coalition parties, the Five Star, Luigi di Maio, might be set to stand down, possibly underscoring divisions among its rank and file.
Reports to that effect sent yields on benchmark 10-year Italian government bonds eight basis points higher to 1.42%.
On the corporate side of things, Daimler Chrysler stock was a tad lower after the carmaker reported a roughly one half drop in its 2019 operating profits, on a before interest and tax basis, to €5.6bn.
In France, the country's statistics office, INSEE, reported an improvement in its manufacturing sector confidence gauge from a reading of 98.0 for December to 100.0 in January.
Meanwhile, in Italy, ISTAT said orders from industry were flat month-on-month in November and 3.1% lower on the year in non-seasonally adjusted terms.
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