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Europe close: Stocks jump on good economic news out of China

By Alexander Bueso

Date: Wednesday 17 Apr 2019

Europe close: Stocks jump on good economic news out of China

(Sharecast News) - Stocks on the Continent finished near their best levels of the session despite news that the German government had taken an axe to its growth forecasts again, thanks to unexpectedly strong readings on Chinese growth and better-than-expected results from some US corporates, including banking heavyweight Morgan Stanley.
On Wednesday, Berlin slashed its 2019 GDP growth forecast again, from 1.0% to 0.5%, which was a far cry from the 2.1% it was peddling at roughly the same time one year ago, although growth was projected to bounce back to 1.5% in the following year.

Nevertheless, the mood was relatively upbeat, with Michael Hewson at CMC Markets UK telling clients: "Markets in Europe have continued to edge higher this week, albeit on quite low volume, helped by a much more benign risk environment.

"The deferral of Brexit until the end of October, the EU Commission authorising the beginning of trade talks with the US has meant that a lot of the imminent tail risk has gone away in the short term, and with some evidence of an improvement in economic data, we've seen equity markets continue to make fresh six-month highs."

By the end of trading, the benchmark Stoxx 600 had edged up 0.10% to 389.59, while the German Dax was up by 0.43% to 12,153.07 and the FTSE Mibtel higher by 0.37% to 22,000.88.

In parallel, euro/dollar advanced 0.13% to 1.12961, amid 'market chatter' that so-called 'risk reversals' in the US dollar were now pointing towards a softer Greenback going forward.

Sterling meanwhile was down by 0.27% against the single currency and changing hands at 1.1536, alongside a gain of 0.23% to $71.88 a barrel on the ICE.

The Stoxx 600 sub-index for companies in the Autos&Parts sector paced gains, adding 1.62%, after China's National Bureau of Statistics reported year-on-year growth of 8.5% in industrial value-added, up from 5.3% in the month before (consensus: 5.9%).

A sub-index linked to companies in the Basic Resources space on the other hand fell 0.73%, held back by reduced guidance for iron ore output from BHP.

Going the other way as well, healthcare companies gave back 1.78% tracking losses for their US-listed peers on the heels of a report from analysts at JPMorgan highlighting "temporary downside risks" to the sector in the form of US Senator Bernie Sanders' most recent medicare proposal.

Elsewhere on the economic front, news was also rather downbeat, with Eurostat reporting an increase in the single currency bloc's trade surplus to €19.5bn in March, but only because imports fell even more sharply than exports when compared to the prior month.

New car registrations in the European Union were down by 3.3% year-to-date to 4.033m, according to the EAMA, led by drops of 6.9% and 6.5% in Spain and Italy, respectively.

The Eurozone's current account surplus meanwhile shrank from €37bn in January to €27bn for February, the European Central Bank said, falling from 3.2% of GDP to 2.9% of GDP in the process, mainly as a result of a decline in the so-called primary income balance.

Shares of Italian football club Juventus cratered 18% after it was eliminated by Holland's AFX Ajax from the Champions League in quarter finals overnight.

Swiss engineer ABB climbed on following news of its boss, Ulrich Spiesshofer's decision to step down.

Commerzbank also gained ground, following reports that ING had joined the list of suitors for the German lender.

Roche slipped despite having raised its 2019 outlook.


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