News Column

European Stocks Tipped To Open Higher On Economic Optimism

June 8, 2014



VIENNA (Alliance News) - The major European markets may follow Asian stocks higher on Monday as a solid US jobs report and encouraging data out of China and Japan added to investor optimism over the global economy.

Coming on the heels of fresh stimulus measures from the European Central Bank and Friday's reassuring US employment report, government data released on Sunday showed that China's trade surplus jumped to nearly USD36 billion in May, the highest in over five years, because of an unexpected fall in imports. While exports increased 7% to USD195.47 billion year-over-year, beating estimates, imports declined 1.6% to USD159.55 billion, signaling weaker domestic demand.

Separately, second estimates released by Japan'sCabinet Office showed that the Japanese economy grew at a quicker pace than estimated initially in the first quarter on the back of unexpected surge in capital spending. GDP grew an annualized 6.7%, up from an initial reading of 5.9% and marking the fastest pace of growth since July-September 2011.

Asian stocks are trading mostly higher, although gains were capped by a stronger dollar amid rising US Treasury Yields. Investors are also watching the latest developments in Ukraine after newly elected president, Petro Poroshenko, opened talks with an envoy of Russian President Vladimir Putin on restoring peace in two breakaway eastern provinces.

The US economic calendar for the week is light, with investors awaiting reports on retail sales, producer prices and consumer sentiment later in the week for fresh signs the economic recovery is gaining traction. James Bullard, president of the Federal Reserve Bank of St. Louis, speaks on the US economic outlook in Tennessee later in the day after US nonfarm payrolls topped expectations, bringing employment back to its pre-recession level.

Closer home, investors will keep an eye on the euro zone's Sentix investor confidence index slated for release at 4:30 am ET. The index is expected to rise to 13 in June from 12.8 in May.

In corporate news, Vodafone Group PLC admitted that the government agencies in many countries have been accessing its infrastructure and listening to the conversations on its network.

European stocks rose for a second straight session Friday, reflecting the twin boost from Thursday's announcement of ECB stimulus action and the solid US jobs report. The German DAX rose 0.4%, while France's CAC 40 and the UK'sFTSE 100 gained about 0.6% each.

US stocks rose on Friday on optimism about the economic outlook after the May payrolls report showed the economy added over 200,000 jobs for the fourth month in a row. The Dow and the S&P 500 rose about half a percent each to fresh record closing highs, while the tech-heavy Nasdaq added 0.6%.



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Source: Alliance News


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