Europe close: Shares reverse early losses as trade tensions ease a tad
By Alexander Bueso
Date: Wednesday 15 May 2019
(Sharecast News) - Stocks on the Continent vaulted higher during the final hour of trading after news broke that the US was considering postponing its decision on whether to place tariffs on imports of foreign automobiles for up to six months.
As well, aaccording to US Treasury Secretary, Steve Mnuchin, an American trade delegation might be sent to China as early as during the following week and progress had been made in resolving the issue of tariffs on steel and aluminium imports from Canada and Mexico.
Italian issues however lagged behind after one of the country's leaders voiced support for breaking the euro area's budget rules if necessary.
Capturing the mood in markets, Michael Hewson at CMC Markets UK said: "The lack of any dip in the Japanese yen or gold suggests that, despite yesterday's rebound, investors are yet to be convinced that the down move in equity markets of the last week or so is over.
"The fall in US and German bond yields, as well as some initial weakness early on in European equity trading today also bears out this line of thinking, with the underperformance in basic resource stocks and the Australian dollar reinforcing concerns about the health of the Chinese economy."
By the end of trading, the benchmark Stoxx 600 was ahead by 0.46% to 378.06 while the German Dax had climbed 0.90% to 12,099.57, but the FTSE Mibtel was left out, dipping by 0.14% to 20,863.14, although the latter did manage to reverse the majority of its earlier losses.
Pacing gains, the Stoxx 600's gauge of Autos&Parts manufacturers ran up 1.97% to 500.10.
On the flip side, analysts at Barclays put out a research note cautioning clients not to "rush" to 'buy the dip' in cyclicals.
"Cyclicals have sold off and are now closer to being oversold than overbought. Tariff headlines remain messy, though, and the gap with PMIs and bond yields that opened ytd has not closed," they said.
Dragging on Italian shares, one of the country´s deputy prime ministers, Matteo Salvini, said: "If there are European rules that are starving the continent, bringing job insecurity, unemployment and poverty, they should be changed".
Overnight meanwhile, figures on Chinese retail sales, industrial production and fixed asset investment covering the month of April all fell short of economists' forecasts, as was the case for data on US retail sales and industrial output.
Somewhat ironically however, the former triggered speculation that Beijing might ramp up its economic stimulus.
Back on the Continent, Germany's Ministry of Finance confirmed that the euro area's largest economy expanded at a 0.4% quarter-on-quarter pace over the first three months of 2019, matching economists' forecasts.
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