Europe midday: Stocks move higher taking their cue from markets overseas
Stocks are recovering from early losses, with Spanish issues rallying despite a somewhat inconclusive result in general elections at the weekend.
Bankia
€1.78
18:15 09/04/21
Deutsche Bank AG
€15.40
17:30 24/04/24
IBEX 35
11,027.80
18:44 24/04/24
Xetra DAX
18,088.70
17:00 24/04/24
Spain's Socialists won 123 deputies in the country's Congress, the most of any party, and despite falling well short of the 176 needed for a majority, might still be able to form a government without the explicit backing of nationalist parties in Catalonia, although it looked as if they would require constant support from others, including from far-left Podemos, in order to be able to pass laws and govern.
Elsewhere on the Continent, some reports suggested that French President Emmanuel Macron's decision to take a page out of the Spanish Socialists' book, by boosting fiscal spending, had convinced some of the 'yellow vest' protesters in Paris to stay at home during the weekend.
According to France's ministry of the interior, the number of protesters declined from 27,900 two weeks ago to 23,600 on Saturday.
Nevertheless, for IG's Chris Beauchamp the main trigger behind the positive risk appetite were the gains overnight in some Chinese equity benchmarks, thanks to data showing a rebound in industrial profits, together with the record highs seen on Wall Street on Friday.
As of 1507 BST, the benchmark Stoxx 600 was flat at 391.01, alongside a loss of 0.03% to 12,311.53 for the German Dax, while the FTSE Mibtel was ahead by 0.15% to 21,770.44.
To take note, strategists at BofA-ML sounded a bullish not on US stocks on Friday, telling clients: "Don't sell in May: we remain bullish risk assets and expect greed in credit & short vol strategies to mutate to equities; Q2 to be a race to see 2% on 30-year Treasury or 20X PE on S&P500; so long as credit bid SPX multiple will surprise on upside; SPX blows through 3000."
Spain's Ibex 35 on the other hand was losing 0.92% to 9,415.90, although the country's 10-year bonds were finding a bid, pushing their yields down by one basis point to 1.01%.
Significantly, an adviser for the Spanish President reportedly vowed to stick to budget consolidation, implicitly arguing that higher taxed alone would suffice. To take note of, political parties were still jockeying for voters' support ahead of local and regional elections on 26 May.
Commenting on the outlook for Spain's economy after the elections, Morgan Stanley's Joao Almedia said in a research note sent to clients: "Some fiscal boost this year also provides extra fuel to the domestic recovery,and we think that there's a low bar for growth to average ~2%Y over the next two years.
"While this might be more than enough for markets to feel comfortable at this stage about the Spanish economic outlook, for the positive rating cycle to continue we think it's important that the reform momentum picks up again."
In the background investors were waiting on central bank policy meetings, including in the US and UK, scheduled for later in the week, as well as the all-important monthly US jobs reports on Friday and the start of the next phase of trade talks between Washington and Beijing scheduled for the next day.
Elsewhere on the economic side of things, the European Commission's economic sentiment index for April slipped to a reading of 104.0 - its lowest level since September 2016 - after printing at 105.6 during the previous month.
The EU's executive arm confirmed a preliminary reading of -7.9 for its consumer confidence gauge, which was down from -7.2 in March.
But a separate sub-index tracking industrial confidence fell from -1.6 to -4.1.
In parallel, according to the European Central Bank, the annualised pace of growth in money supply growth in the single currency bloc picked up from a pace of 4.3% in February to 4.5% for March, although the rate of growth in credit extended to the private sector dipped from 3.2% to 3.1%.
Stock in Deutsche Bank was edging lower even after announcing that it expected the Financial Stability Board, the global regulator to lower the amount of capital that it recommends the lender to set aside as a buffer against potential losses, given its now reduced systemic importance.
Shares of Spain's Bankia were higher despite posting a fall in first quarter net profits, as trading income fell, and the result of the elections at the weekend, given that the Podemos party had lobbied for it to turned into a fully public sector lender.