Europe close: Shares eke out slight advance on trade optimism
By Alexander Bueso
Date: Monday 18 Feb 2019
(Sharecast News) - Stockmarkets on the Continent finished the Monday session sporting slight gains on the back of optimism around the possible outcome of US-China trade talks and amid ongoing speculation that the European Central Bank might be set to ease policy further shortly.
On Saturday, following briefings from his team of trade negotiators, US President Donald Trump said talks with Beijing over the preceding week had been "very productive".
Commenting on those talks and their implications for financial markets, IG's Josh Mahony said: "whilst we saw little by way of notable breakthroughs, the tone and willingness to find a solution is certainly improving. The 1 March deadline for a resolution is less than two weeks away, yet market confidence still remains, as evident from the surge in Asian market overnight.
"Today's Presidents' Day holiday [in the States] affords US traders a breather following the recent surge in US stocks which saw the Dow post the biggest weekly gain in a month."
Against that backdrop, by the end of trading the benchmark Stoxx 600 was up by 0.23% to 369.78, alongside a 0.58% advance for Milan's FTSE Mibtel to 20,329.83 and a gain of 0.30% to 5,168.54 for the Cac-40.
Germany's Dax meanwhile had whittled down an earlier loss to stand just 0.01% lower at 11,299.20.
Weighing on the German gauge, figures from China's Association of Automobile Manufacturers released overnight revealed a weaker-than-expected 15.8% year-on-year decline in auto sales during January.
That was on top of news that the US Commerce Department had finished its report on whether auto imports represented a threat to national security.
Analysts expected the findings in that report - which had not been made public - to be used for leverage in upcoming negotiations with Japan and the European Union.
In parallel, front month Brent crude oil futures gained 0.271% to stand at $66.43 a barrel on the ICE and were changing hands at roughly three-month highs.
Euro/dollar was slightly higher as well, adding 0.11% to 1.13108.
On a more discordant note, pressure from US vice-president Mike Pence at the Munich Security Conference, for Europe to put more pressure on Iran, appeared to trigger some 'push back'.
Also boosting sentiment perhaps, in an interview with Spain's El Pais, on Saturday, French European Central Bank Governing Council member, Francois Villeroy de Galhau, said that the slowdown observed thus far in the Continent's economy had been "significant".
Nevertheless, he sounded a hopeful note on the economic outlook, stressing that any new central bank loans for lenders, which are known by the acronym TLTRO, needed to have a justification in terms of monetary policy and not on the needs of some banks or certain jurisdictions.
De Galhau appeared to be pushing back a little on market expectations for another round of TLTROs following remarks from fellow GC member, Benoit Coeure, on the preceding Friday.
No major economic releases were scheduled for release in the Eurozone on Monday, nor in the US, where markets were set to remain closed in observance of Presidents' Day.
On the corporate side of things, shares of German payments processing outfit Wirecard extended their recent bounce, after the country's financial market regulator, BaFin, banned short positions in the company's stock.
In its latest move to bolster finances and just days after IAG ruled out a bid for the airline, Norwegian Air said it would sell shares in a 2-for-1 rights offer at NOK33 each, or nearly a third of their Friday closing price of NOK97.34.
The news sent stock in the airline plummeting by almost 15% before it recovered, ending the day around 4% lower.
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