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Europe close: Stocks edge higher even as coronavirus fatalities rise

By Alexander Bueso

Date: Wednesday 29 Jan 2020

Europe close: Stocks edge higher even as coronavirus fatalities rise

(Sharecast News) - Stocks in Europe extended the previous day's bounce - but only slightly - helped by positive results from tech giant Apple as they waited for the US central bank's policy decision.

Overnight, the death toll in China from the nCoV coronavirus rose to at least 132, but investors held their nerve.

Yet analysts like Oanda's Craig Erlam believed markets' "resilience" could soon be tested, the welcome distraction of US corporate earnings notwithstanding.

"The knee jerk reaction on Monday was strong but with British Airways now cancelling trips to and from China, film premiers being cancelled, shops closing and internal travel plummeting, it seems entirely justified and probably not severe enough," he said.

The benchmark Stoxx 600 finished up by 0.44% to 419.41, alongside a gain of 0.16% to 13,345.0 for the German Dax and an advance of 0.57% to 24,164.08 on the FTSE Mibtel.

Economists at Nomura appeared to be of a similar view to Erlam, telling clients that the annualised rate of growth in China's gross domestic product might slow in the first quarter of 2020 by more than the two percentage points seen during the 2003 SARS epidemic.

However, once the virus was contained, pent-up demand could drive a V-shaped recovery, they added.

Credit Suisse's Andrew Garthwaite was somewhat less cautious.

Citing the new coronavirus's lower mortality rate in comparison to the 2003 SARS epidemic and the quick actions taken by Beijing, Garthwaite believed that the impact of the contagion on global GDP would be limited.

"We believe the global economy will continue to recover, even if there is a near term 'pause'," he said.

Front month Brent crude oil futures meanwhile climbed 0.25% to $59.66 a barrel on the ICE.

In the background, the latest earnings from US heavyweights Apple, GE, Mc.Donalds and AT&T all pleased, but those of Boeing and chip-maker AMD both fell short of forecasts on the Street.

On the economic front, the latest monthly survey results showed that consumers across the euro area's three largest economies - France, Germany, and Italy - were in a more buoyant mood in January and February.

In the case of Germany, consultancy GFK's sentiment index rise from a reading of 9.7 for January to 9.9 in February (consensus: 9.6).

Nevertheless, for Claus Vistesen at Pantheon Macroeconomics, it remained to be seen whether the upturn in the German index would stick.

More generally, fears around the new coronavirus in China were likely to weigh on the consumer mood over the first quarter of 2020, Vistesen added.

Still ahead for later in the session, were quarterly updates from a raft of US corporate heavyweights, including Microsoft and Tesla.

And at 2000 GMT, the Federal Reserve would announce its policy decision and while no changes were anticipated, some analysts were wary that might it modify its guidance for its purchases of short-term government debt, which they believed could potentially sap the strength in stocks.

In October, the Fed announced that it would start purchasing so-called T-bills at a pace of $60.0bn each month through April, in a bid to smooth out tensions in short-term funding markets.

CAC 40 - Risers

Safran (SAF) 150.05 +3.84%

Legrand SA (LR) 74.40 +2.45%

Michelin (ML) 108.00 +1.74%

Airbus SE (AIR) 136.56 +1.73%

Schneider Electric (SU) 93.70 +1.67%

Renault (RNO) 36.15 +1.66%

Peugeot (UG) 19.40 +1.39%

Air Liquide (AI) 131.05 +1.28%

Sanofi (SAN) 88.67 +1.14%

Kering (KER) 568.00 +1.10%

CAC 40 - Fallers

Capgemini (CAP) 115.35 -1.33%

Sodexo (SW) 97.80 -1.31%

Orange. (ORA) 12.95 -1.11%

LVMH (MC) 407.60 -1.07%

Carrefour (CA) 15.56 -0.70%

Total (FP) 46.18 -0.63%

ST Microelectronics (STM) 26.89 -0.63%

Bouygues (EN) 36.80 -0.62%

Danone (BN) 72.84 -0.46%

Publicis Groupe Sa (PUB) 40.81 -0.37%







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