European Markets Close On Buoyant Note On Trade Deal Optimism

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European markets ended the first trading session of the new year on a high note, as stocks climbed higher on Thursday, buoyed by optimism about a U.S.-China trade deal after U.S. President Donald Trump said the phase one trade agreement would be signed in the middle of this month.

Trump said the deal is due to be signed during a White House ceremony on January 15th. He also posted on Twitter a couple of days ago that he would travel to Beijing at a later date to begin talks on phase two of a trade agreement.

Recent reports have indicated Chinese Vice Premier Liu He, Beijing’s top trade negotiator, will be on hand to sign the phase one deal this month.

News of monetary policy easing by China helped as well in lifting investor sentiment. The People’s Bank of China said it would cut banks’ reserve requirement ratio by 50 basis points on Jan. 6, freeing up more than US$ 100 billion for loans to small businesses.

The pan European Stoxx 600 gained 0.93%. Among the major markets in Europe, the U.K., Germany and France, all ended on upbeat note. The U.K.’s FTSE 100 gained 0.82%, while Germany’s DAX and France’s CAC 40 ended higher by 1.03% and 1.06%, respectively. The Switzerland stock market remaned closed for New Year holidays.

Among other markets in Europe, Austria, Belgium, Czech Republic, Finland, Greece, Iceland, Ireland, Italy, Netherlands, Norway, Poland, Portugal, Spain, Sweden and Turkey, all ended with strong gains.

Denmark ended flat, while Russia and Ukraine remained shut for New Year holidays.

In the U.K. market, Micro Focus, Tui, Barclays, Antofagasta, Legal & General, Glencore, Standard Life, Smiths Group, Just Eat, Kingfisher, Lloyds Banking, BP, BT Group and CRH ended with sharp gains.

In France, STMicroElectronics gained more than 3%. Airbus Group, Kering, Peugeot, Societe Generale, Engie and Credit Agricole gained 2 to 2.3%.

Capgemini, Bouygues, Schneider Electric, Vivendi, BNP Paribas, AXA, Atos and Saint Gobail also ended sharply higher.

In the German market, Deutsche Bank climbed nearly 6% and Commerzbank spurted about 7%.

Wirecard gained about 4.5%. Volkswagen, Infineon, Siemens, Covestro, Lufthansa, BMW, Allianz, BASF and SAP also closed sharply higher.

In economic news, the euro area manufacturing sector continued to contract in December with weakness spread across most of the member countries, final data from IHS Markit showed Thursday.

The manufacturing Purchasing Managers’ Index fell to 46.3 in December from 46.9 in November. However, the score was above the flash reading of 45.9. The PMI reading has remained below the 50 no-change level for the eleventh consecutive month, suggesting that the sector had remained in negative territory in 2019.

France’s manufacturing sector expanded at the slowest pace in three months in December, survey data from IHS Markit showed. The final factory Purchasing Mangers’ Index fell to 50.4 in December from 51.7 in November.The flash score was 50.3.

Germany’s manufacturing sector ended the year 2019 deep in contraction, reflecting marked decreases in output and employment, according to survey data from IHS Markit. The headline IHS Markit/BME manufacturing Purchasing Managers’ Index fell to 43.7 in December from a five-month high of 44.1 in November. The flash reading was 43.4.

Germany’s employment reached a record high in 2019 driven by higher labor force participation and the immigration of foreign workers, official data showed Thursday.

The number of persons in employment increased 0.9% in 2019, which was a smaller rise compared to the 1.4% increase seen in 2018, Destatis reported.

The unemployment rate was down to 3% in 2019 from 3.2% in the previous year.

The UK manufacturing sector shrank in December as output contracted at the fastest pace since July 2012, survey data from IHS Markit showed Thursday.

The Markit/Chartered Institute of Procurement & Supply Purchasing Managers’ Index fell to 47.5 in December, the second-weakest level for almost seven-and-a-half years. The flash score was 47.4.

The PMI remained below the neutral mark of 50.0 in each of the past eight months. Output contracted at the fastest pace since July 2012.

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2020-01-02 13:00:13

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