News Column

European Stocks To Follow Asian Markets Higher

August 3, 2014

VIENNA (Alliance News) - European stocks are seen rising on Monday, although gains may be capped by geopolitical uncertainty and a lingering threat of deflation in the euro zone. The Asian markets are trading mostly higher, shrugging off a weak lead from Wall Street Friday, as investors digested mixed US jobs data and the bailout of a Portuguese bank.

Portugal's central bank on Sunday announced a plan to rescue the troubled lender Banco Espirito Santo (BES) to protect taxpayers and senior creditors. In a 4.9 billion euros bailout that will leave junior bondholders with losses, the lender will be split into a "good bank" with the healthy assets and "bad bank" with the riskier ones under a state rescue plan.

The US dollar remains under pressure against a basket of six-major currencies as the latest US jobs report weakened the case for an early interest rate hike by the Federal Reserve.

Meanwhile, Israel declared a humanitarian truce for seven hours in parts of the Gaza Strip on Monday following another strike on a United Nations-run school over the weekend.

In economic releases, British small and medium-sized manufacturers reported another strong quarter of orders and output growth in the three months to July, according to the SME Trends Survey from the Confederation of British Industry. A balance of 14% said new orders increased in three months to July. "Firms remain upbeat about their business situation and they are hiring at their fastest rate since 1988," said Katja Hall, CBI deputy director-general.

Investors await Eurozone sentix investor confidence as well as UK construction PMI data in the European session for further direction.

In corporate news, Permira Advisers LLP is in talks with advisers about a potential sale of its remaining stake in German clothing maker Hugo Boss AG seven years after taking control, according to a Bloomberg report.

Porsche Cars North America, Inc. announced July 2014 sales of 4,300 vehicles, up from 3,820 vehicles last year.

The European markets fell for a third consecutive session Friday, with geopolitical tensions and debt concerns in Argentina and Portugal weighing on the markets. The German DAX plunged 2.1%, France's CAC 40 lost a percent and the UK'sFTSE 100 index declined 0.8%.

US stocks cut earlier losses but still ended lower for a second day in a row Friday despite some strong earnings and solid reports on the US labor market, manufacturing sector, personal income and spending. Construction spending fell sharply in June and consumer sentiment slid in July while an index of consumer expectations weakened for a third straight month, separate reports showed. The Dow slid 0.4% and the S&P 500 shed 0.3% to end at two-month closing lows, while the tech-heavy Nasdaq dropped 0.4%.

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Source: Alliance News

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