Europe open: Stocks rise alongside fresh record high for gold
Stocks in Europe were moving higher on Wednesday, helped by a rally for beaten down travel and leisure names, positive corporate results and some better-than-expected economic data.
But analysts were also at pains to note the dizzying gains for gold alongside with some pointing to caution around the robustness of the recovery and others to the ongoing tensions between the US and China as the reason behind Wednesday's price gains.
On the former, IG's Chris Beauchamp said: "That both equities and the supreme risk-off asset are moving higher just shows how conflicted investors are – they can’t avoid being tempted by equities, but they can also read the unending stories of bankruptices, such as Virgin Atlantic in the US this morning, and the litany of job losses, with WHSmith becoming the latest High Street firm to cut roles, and thus can see the appeal of gold."
As of 1015 BST, the pan-European Stoxx 600 was ahead by 0.67% to 365.84, alongside a 0.91% advance for Germany's Dax to 12,715.44 while the FTSE Mibtel was ahead by 0.79% to 19,767.15.
In parallel, euro/dollar was up 0.38% to 1.1848 while front-dated Brent was up 1.71% to $45.19 per barrel on the ICE.
But the biggest gains in commodities were among gold and silver futures which were bounding ahead by 1.48% and 2.74% to trade at $2,050.90/oz. and $26.74/oz., respectively.
Among equities meanwhile, IAG, Easyjet and Lufthansa were at the top of the leaderboard for the Stoxx 600, pushing a gauge for the sector up by 1.91%.
Another sector sub-index for Oil&Gas meanwhile had strengthened 2.0%.
Commerzbank was a standout gainer as well following the release of better-than-expected second quarter profit of €220m, including a lower-than-expected forecast for full-year loan-loss provisions although management did drop its forecast for full-year profits.
Another V spotted in the Eurozone data, some analysts say
Retail sales volumes in the euro area were reported by Eurostat at up by 1.3% year-on-year for June after a 3.1% drop in May (consensus: -0.2%).
"Overall, these data have been very strong in the past few months. The rise in June left retail sales 0.2% above its pre-crisis level at the end of Q2, which is impressive," said Pantheon Macroeconomics's Claus Vistesen.
Nevertheless, Vistesen expected a "bumpier" ride going forwards.
IHS Markit's euro area services sector Purchasing Managers' Index meanwhile printed at 54.7 for July, up from 48.3 in the month before (Flash: 55.1).
The composite output index meanwhile came in at 54.9, against 48.5 for July (Preliminary: 54.8), but only due to the faster than expected recovery in factory output during the same month.
Chris Williamson, chief business economist at IHS Markit, said that Wednesday's readings bode well for a rebound in third quarter activity levels.
But he added: "even without a significant increase in infections, social distancing measures will need to be in place until an effective treatment or vaccine is available, dampening the ability of many firms to operate at anything like pre-pandemic capacity, and representing a major constraint on longer-run economic recovery prospects."