Europe close: Stocks reclaim December losses on trade hopes
By Alexander Bueso
Date: Saturday 19 Jan 2019
(Sharecast News) - Stocks on the Continent continued to reclaim their losses from last month on the back of a quick succession of more positive-sounding news on the global trade front.
"The week is ending with solid gains across the board, with European markets in particular playing catch-up to the US. Trade headlines continue to drive sentiment, and this afternoon there is a particularly impressive one - China apparently offered to go on an import buying spree in order to cut the US deficit in half," said IG's chief strategist, Chris Beauchamp.
"This sounds too good to be true, and it would be wise to treat it with caution. Having gained over 2% this week, US markets are not exactly surging on the news, but with earnings season also going well it looks like the rally will continue, with Wall Street dragging everyone else higher with it."
By the of trading, the benchmark Stoxx 600 was ahead by 1.80% or 6.32 points at 357.05, alongside a rise of 2.63% or 286.92 points to 11,205.54 for the German Dax and an advance of 1.22% or 237.68 points to 19,708.06 for the FTSE Mibtel.
In parallel, euro/dollar was off by 0.27% to 1.13602 while the front month Brent crude oil contract was up by 2.128% to $62.51 a barrel on the ICE.
Meanwhile, the yield on the benchmark ten-year Spanish government note was off by two basis points at 1.35%.
Stoking gains in stockmarkets, late in the afternoon session, Bloomberg reported that China had offered to embark on a six-year $1.0trn buying spree of US goods in a bid to reconfigure the trade relationship between the two economic giants and reduce its trade surplus with America to zero by 2024.
That came on top of a report overnight in the Journal that US officials were debating whether to lift some of their tariffs on Chinese goods in order to soothe financial markets and incentivise Beijing to make "deeper concessions", although America's trade representative, Robert Lighthizer, had opposed that option.
Nevertheless, Lighthizer was described as having softened his own stance as well.
Be that as it may, a spokesman for the US Treasury later denied any such initiative, which had been attributed to US Treasury Secretary, Steve Mnuchin, was on the table.
Neither Secretary Mnuchin nor Ambassador Lighthizer have made any recommendations regarding the tariffs or other parts of the negotiation with China, the spokesman also said, adding that "this an ongoing process with the Chinese that is nowhere near completion."
The economic calendar was very light at the end of the week, with only the latest euro area current account figures on tap.
According to the European Central Bank, the Eurozone's current account surplus shrank from €27.0bn in October to €20bn for November.
However, in its quarterly economic bulletin, Italy's central bank cut its forecasts for the rate of growth in the country's GDP in 2019 and 2020, from 1.0% and 1.1% to 0.6% and 0.9%, respectively, signalling that Italy may have fallen into recession at the end of 2018.
Over in the corporate patch, shares of RyanAir recovered from early selling after the airline cut its full-year profit forecast again, blaming lower winter fares and cautioning of the impact that Brexit might have.
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