Corporate earnings and merger speculation push European markets higher

European stock markets inched higher on Monday as expectations for a flurry of bumper corporate earnings and merger speculation outweighed fears about the escalating trade conflict between Beijing and Washington.

Data showing China’s economy and factory production growth had slowed hurt Asian markets at the start of the week, as investors fret an escalating trade battle between China and the US may soon start to hurt the real economy.

European shares mostly opened higher, although the gains were marginal. Germany’s DAX was the biggest riser, up half a percent before giving up most of those gains. France’s CAC 40 rose 0.16% and the panEuropean STOXX 600 0.23%. Basic resources and autos were among the worst-performing sectors. Both rely on solid Chinese growth, but merger speculation concerning industrials helped outweigh the Chinese data. The MSCI world equity index, which tracks shares in 47 countries, was flat on the day.

US banks kicked off the earnings season on Friday and this week sees dozens of European companies report their secondquarter numbers.

The data out of China showed its economy grew 6.7% in the second quarter of 2018, cooling from the 6.8% growth registered in each of the previous three quarters. The GDP figures were in line with market expectations, but the new data also showed slower-than-expected growth in China’s industrial output, pointing to slowing momentum and prompting some analysts to call for stronger government measures to support growth. Taken together, the data show an economy continuing to slow under the influence of a multi-year crackdown on excessive financial risk, even as trade war headwinds gather.

MSCI’s broadest index of AsiaPacific shares outside Japan fell 0.36%.

In commodity markets US crude fell 0.76% at $70.47 a barrel, pushed lower by easing concerns about supply disruptions and Libyan ports reopening. Brent crude fell 0.36% at $75.06 a barrel. Gold prices recovered from a seven-month low on a weaker dollar.

This article was compiled by BOV Asset Management Limited, a member of the BOV Group. BOV Asset Management,TG Complex, Suite 2, Level 3, Brewery Str., Mriehel BKR 3000. Email: infoassetmanagement@bov.com Internet address: www.bovassetmanagement.com. BOV Asset Management is licensed by the MFSA.