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30 Jun, 2020 12:25

Europe midday: Stocks edge higher, technology issues lead

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AirbusEUROPA PRESS

Stocks are edging higher come midday helped by the release of some significantly better-than-expected readings on the economy in Europe and from overseas.

Yet in the background, analysts appear to be divided on the staying power of Monday's rally in stocks, although IG's Chris Beauchamp saw reasons to remain optimistic.

"End of month and quarter rebalancing may continue for another day, but breadth appears to be recovering, suggesting that this rally may not go without a fight," he told clients.

As of 1206 BST, the benchmark Stoxx 600 was edging up 0.03% to 360.01, alongside a 0.27% advance for the German Dax to 12,264.75 while the Cac-40 was little changed, up 0.04% to 4,947.24.

Technology was doing well, mimicking gains overnight on the US Nasdaq Composite.

The Stoxx 600 sector gauge was adding 0.65% with shares of European chipmakers buoyed by confident revenue forecasts out of US peer Micron.

Dampening the mood a bit, in prepared remarks ahead of his testimony before a Congressional committee on Tuesday afternoon, the head of the US central bank stressed the need to "keep the virus in check".

Underscoring that view, a smattering of new novel coronavirus cases or outbreaks were reported overnight in Australia, Japan, South Korea and China.

However, the daily rates of new infections decreased in the US and, in Germany, outbreaks appeared to remain under control, with the so-called R-naught reproduction rate for Covid-19 only inching up from 0.71 for Monday to 0.74 on Tuesday.

Oil&Gas shares on the other hand were a drag on the Stoxx 600 after Royal Dutch Shell lowered its long-term outlook for oil and gas prices and announced that it would write-down the value of its assets by as much as $22bn.

A bounce in Wirecard stock extended into its second day after its North American unit said it was pursuing a sale and Britain's CFA cleared its UK unit to resume operations.

In other news, German lender Commerzbank was reportedly mulling 7,000 job cuts while Airbus was said to be planning a restructuring.

On the economic side of things, France's INSEE reported a 36.6% month-on-month surge in household consumption for May (consensus: 30.0%).

That helped push the year-on-year rate of decline from April's dire -32.7% amid coronavirus lockdowns to -8.3%, although Pantheon Macroeconomics estimated that consumption might still fall by around 15.1% in the second quarter.

Overseas, China's 'official' factory sector Purchasing Managers' Index printed at 50.9 for June, against 50.5 in May (consensus: 50.6), despite the Covid-19 lockdowns that were put in place during the month in Beijing.

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Pilling and Co Stockbrokers Ltd. is not responsible for the content or accuracy of third party news articles and we may not share the views of the author.

We provide third party news for your convenience and information only and make no representation or endorsement whatsoever and hereby exclude all liability for any loss or damage that may be incurred by you as a result of your access or use. Please note that third party content may be subject to terms and conditions imposed by the third party owner of that content.