Portfolio

Europe close: Indices continue to grind higher amid positive US-China trade news

By Alexander Bueso

Date: Friday 13 Sep 2019

Europe close: Indices continue to grind higher amid positive US-China trade news

(Sharecast News) - European shares finished higher on Friday amid reports that China will exempt further US goods from additional tariffs, as investors continued to mull the European Central Bank's latest policy moves amid a big move higher in bank shares.
By the end of trading, the Stoxx 600 was up 0.34% at 391.79, Germany's Dax had gained 0.47% to 12,468.53 and the French CAC 40 climbed 0.34% to 5,655.46.

In further signs of warmer and more positive relations between the two superpowers, Chinese state news agency Xinhua reported that Beijing will exempt some US agricultural goods, including pork and soybeans, from additional tariffs.

Meanwhile, President Trump said late on Thursday that he would consider an interim trade deal with China but would still prefer a more comprehensive agreement.

Stephen Innes, market strategist at AxiTrader, said: "Given that investors have been known to wear trade war emotion on their sleeve, any steps by China and the U.S. to ease tensions further ahead of face-to-face talks in Washington in the coming weeks will be a green light of risk sentiment.

"However, the confluence of improved circumstances will certainly put investors in a much happier place than anyone could have imagined only a week ago."

Thursday saw the long-anticipated European Central Bank's announcement of new stimulus measures, with the monetary authority cutting the deposit facility rate from minus 0.4% to minus 0.5% and committing to a quantitative easing package of €20.0bn per month.

Neil Wilson, market analyst at Markets.com, said: "We sense a bit of disappointment after the ECB despite the QE ad infinitum - Draghi delivered in many ways but it's just increasingly clear the ECB is out of ammunition. For me Draghi delivered all he could with a last blitz of stimulus in a kind of Butch Cassidy and the Sundance Kid type finale."

Among individual stocks, banks packed out the top riser spots on the Stoxx 600, with CaixaBank, Banco de Sabadell, Commerzbank, Royal Bank of Scotland, Barclays, Bank of Ireland and AIB all on the rise as the ECB's new stimulus package provided a boost.

The Stoxx 600's sector gauge for banks jumped by 2.74%.

Deutsche Bank shares also gained after the company agreed to pay $15.0m to settle its part of a lawsuit over allegations of price-fixing in US government bond deals, with some analysts pointing out that the lender would be a key beneficiary of the ECB's decision to implement tiered rates on lenders' excess reserves.

Italian infrastructure group Atlantia was the index's top faller as Reuters said three company officials had been placed under house arrest as part of an investigation into falsified motorway viaduct safety checks.

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