- German industrial output helps European stocks trade higher
- China growth forecast cut reverse stock gains
- FTSE lifted by Glencore (LONDON:GLEN) rally
- Copper forms a base; Antofagasta (LONDON:ANTO) up
- AB Foods (LONDON:ABF) bottom of the FTSE
European stock markets opened higher on Monday after strong German economic data went some way to offset China-concerns and the threat of higher US interest rates.
German industrial output expanded by 0.7% in July, a big improvement over the -0.9% contraction in June but slightly lower than the 1.1% forecasted.
Chinese markets opened strongly following a four-day weekend after the G20 endorsed its policy actions and a PBOC central banker suggested the worst volatility was over. However, the government trimming its growth forecast by -0.1% to 7.3% and a report that foreign reserves had fallen by a record $94bn last month put the jitters back in and benchmark indices closed lower.
The German DAX is hovering above the psychological 10,000 mark while staying within the previous week’s range. After a volatile few weeks of strong directional movements, mostly to the downside in European stocks, it was relatively calm last week.
The 6,100 level has acted as a central magnet for the FTSE 100 over the past seven trading days, with attempts at a breakout either way unsustained.
A new package of reform measures aimed at cutting debts helped make Glencore a top riser at the open on the FTSE. The measures including asset sales, a dividend cut and rights issues are all aimed at addressing the firm’s over-leveraged balance sheet that leaves it exposed during the current bear market for commodities.
A two percent bounce in the price of copper on Monday improves the chance the metal has formed an interim base after hitting fresh six year lows two weeks ago. Copper’s recovery is helping FTSE-listed copper miner Antofagasta to over 7% gains on Monday.
AB Foods dropped to the bottom of the index after a poorly-received half-year update. AB Foods continues to be a story of two businesses with diverging performance profiles; progress at Primark and falling profits in its sugar business.
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