Europe’s major stock markets move up early on Monday after Chinese indicators suggest the measures implemented by the Beijing authorities will stabilize the world’s second-largest economy.
In Paris, the CAC 40 index gained 0.39% at 5,594.64 points around 07:35 GMT. In Frankfurt, the Dax gained 0.80%, and in London, the FTSE gained 0.25%.
The Eurozone’s EuroStoxx 50 index advanced by 0.41%, the FTSEurofirst 300 by 0.39% and the Stoxx 600 by 0.35%.
China’s gross domestic product (GDP) growth slowed in the second quarter to 6.2 percent year-on-year, a 27-year low in the context of increased trade tensions with the United States.
Investors seem especially remember that this figure is in line with expectations and other official statistics released Monday also signal stabilization of the Chinese economy, with industrial production and retail sales above expectations in June.
However, there is still a need for caution as a new quarterly earnings season kicks off, which will say whether earnings and company forecasts justify high valuations.
“It’s the turn of the fundamentals to take over,” say analysts Saxo Bank. “The first US results could initiate the trend while the rate cut should no longer be the main subject.”
VALUES TO FOLLOW:
In the first exchanges in Europe, the news of companies animates the rating.
Galapagos and takes 17.32% to a record high, after the announcement by the US Gilead Sciences investment of 5.05 billion dollars (4.5 billion euros) to strengthen the capital of the Belgian biotechnology company.
In Paris, one of the few drops in the CAC 40 is for Danone, which loses 0.71% after a downgrade by Credit Suisse.
On the rise, PSA (+ 0.73%) does not suffer from the announcement of a drop in global sales in the first half, marked by a slight increase in volumes in Europe and a decrease in China and the Africa region the Middle East.
The SSE Composite Index of the Shanghai Stock Exchange gained 0.4%, and the MSCI Index of Asia Pacific (excluding Japan) rose by 0.2%.
Markets are closed in Japan for a holiday.
The New York Stock Exchange ended Friday up with closing records for all three major indices, still enjoying the hope that the Federal Reserve will lower rates at the end of the month.
Forward contracts are currently up slightly, but the trend could change with the publication before the opening of Citigroup results.
The news from China has the effect of boosting the yield of Treasuries to 10 years, which takes three basis points to 2.14% but remains well below the target set by the Federal Reserve (2.25% -2, 50%) for Fed funds.
“The accommodating rhetoric of the Fed makes a rate cut in July a certainty in the eyes of the markets,” wrote in a note Hans Redekar, Morgan Stanley’s strategist. “The question is not whether there will be a rate cut but how big it will be.”
In early trade in Europe, the yield on the 10-year German Bund, the benchmark euro-zone rate, is moving in equilibrium, around -0.25%.
The dollar is stable against a basket of reference currencies, and the euro hardly varies around 1.128 dollars.
The two crude benchmark contracts balance out at around $60.20 per barrel for US light crude and $66.77 for North Sea Brent.