The European stock market is poised to open positively on Friday. Recent confirmations about a US/UK trade deal and the growing expectation surrounding important trade negotiations scheduled between China and the United States this weekend are boosting confidence.
Investors will be focused on the latest trade statistics from China and corporate earnings.
Early indications point to modest gains on the continent.
FactSet’s futures data suggests that the Stoxx Europe 600 pan-European index may open 0.3% higher.
The FTSE 100 in the UK is expected to gain 0.3%. Meanwhile, Germany’s DAX, and France’s CAC 40, are predicted to start with gains around 0.2%.
The majority of major European indices closed positively on Thursday. However, the UK’s FTSE 100 bucked this trend and fell 0.32%, ending its record-breaking winning streak that had started on Wednesday.
China trade data beats expectations amid tariff pressure
Fresh trade data from China released on Friday morning added a surprise upside to the global picture. China’s April exports (in US dollars) were up 8.1% compared with the same month last year. This was a significant improvement over Reuters poll results of a 1.9% increase.
The robust performance of Chinese exports occurred as businesses in China began to absorb more and more the effects of increased US tariffs which took effect at the end last month.
In April, Chinese imports were down by just 0.2% compared to the same month last year, which was much better than what economists expected, a drop of 5.9%.
It seems that Beijing is making some progress in its efforts to boost domestic demand. Investors analyzed the new data as they traded Asian-Pacific stocks on Friday.
Earnings in focus: Commerzbank shines
Earnings from corporations remain the key factor in market sentiment.
Commerzbank, a German bank, reported strong results for the first quarter on Friday. The net profit grew 12% from last year to $834 million.
The bank has now achieved its highest quarterly profit in 2011 and comfortably surpassed the analyst’s expectations.
The market had expected 2.96 billion euro, but revenues rose by 12%.
Commerzbank has reaffirmed their full-year forecast, which aims for a profit net of 2.8 billion euro in 2025. (This is expected to drop down to 2.4 billion after restructuring).
UniCredit has recently speculated about a takeover of both Commerzbank (Germany) and Mediobanca, an Italian bank that also reports earnings.
Investors are also awaiting the results of Portuguese utility EDP. This company was under scrutiny following a large power failure earlier this month.
Wall Street Futures are muted
The mood on Wall Street was subdued overnight.
The Dow Jones Industrial Average futures fell by 52 points (0.1%), while Nasdaq100 futures dropped 0.08% and S&P500 futures lost about 0.1%.
The slight caution seen in US futures comes after a week of gains, partly due to hopes that trade talks would progress and some encouraging comments by Federal Reserve officials.
The opening of European markets will be influenced by the interaction between the robust Chinese export figures, corporate earnings and the anticipation for the US-China Trade Talks in Switzerland.
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