Stock prices in Europe were in the green on Monday morning after data on Saturday showed that annual consumer price inflation in China slowed in October.
Swissquote’s Ipek Ozkardeskaya said that ‘the picture remains bullish for the US equities’ following Trump’s re-election but ‘Elsewhere, worries mount: FTSE 100 and the European Stoxx 600 index both closed last week below the 200-DMA on worries about a heated international trade environment and the Chinese leg of the story is much less dreamy, too.
China announced that it will deploy ¥10 trillion to refinance local government debt, as expected by investors. Alas, the announcement failed to revive optimism as many were hoping to see bigger measures deployed in response to Trump’s presidency – who is now expected to increase tariffs on Chinese goods to 60%.’
In further disappointing news from China the consumer price index, a key measure of inflation, rose 0.3% year-on-year in October. This was down from 0.4% in September, and below the 0.4% forecast in a Bloomberg survey of economists.
Producer prices also slid 2.9% year-on-year in October, compared to a decrease of 2.8% in September, extending a deflationary run that began in late 2022.
Back in the US, Trump has reportedly spoken with German Chancellor Olaf Scholz, Israeli Prime Minister Benjamin Netenyahu and Russian President Vladimir Putin.
He has also named former acting Immigration & Customs Enforcement director as the administration’s so-called ‘border tsar’, and is pressuring Senate leader candidates to change the rules and empower him to appoint new cabinet members without a confirmation vote.
The FTSE 100 index opened up 60.60 points, 0.8%, at 8,132.99. The FTSE 250 was up 202.76 points, 1.0%, at 20,720.68, and the AIM All-Share was up 2.53 points, 0.3%, at 736.89.
The Cboe UK 100 was up 0.9% at 817.21, the Cboe UK 250 was up 1.2% at 18,177.30, and the Cboe Small Companies was up 0.1% at 16,262.43.
Croda International was leading the FTSE 100, up 4.9%.
The company said its third quarter sales have risen on-year to £407 million from £387 million, reflecting ongoing momentum in its Fragrances & Flavours business.
It left its outlook unchanged, still eyeing an adjusted pretax profit of between £260 million and £280 million for 2024.
The index’s miners had mixed reactions to the latest China news, with Rio Tinto leading the laggers on a 0.6% loss and Glencore down 0.2% while Fresnillo was up 1.8%.
On the FTSE 250, Kainos led with a 5.9% increase.
Its revenue was down 5% on-year at £183.1 million but pretax profit rose 11% to £34.2 million, and Kainos raised its interim dividend 13% to 9.3 pence per share.
Among smaller caps, Aquis Exchange shares more than doubled after it agreed to a 727p per share cash takeover offer from Switzerland’s Six Group.
The offer has support from holders of 51% of Aquis shares and gives it an enterprise value of £194 million.
In European equities on Monday, the CAC 40 in Paris was up 1.3%, while the DAX 40 in Frankfurt was up 1.3%.
The pound was quoted at $1.2899 early on Monday in London, lower compared to $1.2926 at the equities close on Friday. The euro stood at $1.0687, lower against $1.0731. Against the yen, the dollar was trading higher at JP¥153.76 compared to JP¥152.62.
‘The Trump tariff threat on European imports has become one of the major drivers here as well, combined with the troubled French finances and the chatter of early election in Germany,’ Ozkardeskaya. ‘A further retreat is on the cards, unless we see a surprise easing in US inflation.’
In Asia on Monday, the Nikkei 225 index in Tokyo was up 0.1%. In China, the Shanghai Composite was up 0.5%, while the Hang Seng index in Hong Kong was down 1.6%. The S&P/ASX 200 in Sydney closed down 0.4%.
In the US on Friday, Wall Street ended higher, with the Dow Jones Industrial Average up 0.6%, the S&P 500 up 0.4% and the Nasdaq Composite up 0.1%.
Brent oil was quoted higher at $73.85 a barrel early in London on Monday from $73.58 late Friday.
‘The barrel of US crude is back testing the $70pb support to the downside, having erased past week gains that were supported by geopolitical worries and hints that OPEC would delay the end of its production restrictions by at least a month,’ Ozkardeskaya said.
Gold was quoted lower at $2,670.21 an ounce against $2,685.63.
Still to come on Monday’s economic calendar, US bond markets are closed for Veterans Day and Ireland is set to release industrial production and construction PMI data.
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