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China’s stimulus package lifts stocks, UBS post solid Q2 figures

European stock markets are higher in the wake of Beijing’s plans to stimulate the economy. 

The Chinese government unveiled plans to boost domestic demand in the face of heightened trade tensions. The second-largest economy in the world has been slowing down in recent years, and the tariffs imposed by the US are making matters worse. The proactive move by Chinese authorities has lifted investor confidence around the globe.   

UBS shares are higher this morning after the bank reported a solid set of second-quarter figures. Profit for the period jumped by 12% to SFr 1.68 billion, which comfortably exceeded the SFr 1.4 billion that equity analysts were expecting. The investment banking division was the driving force behind the jump in earnings, as the department saw a 26% jump in profit. The wealth management unit saw outflows of SFr 1.2 billion. The bank cited seasonal tax related outflows in the US for the exodus of funds from the division. UBS issued a broadly positive outlook, but cautioned that the rise in protectionism could hurt investor confidence. The stock has been in a downward trend since January, but has pushed higher today, and if it can hold above the SFr 15.00 region its outlook could remain positive.     

Superdry shares have taken a knock after Julian Dunkerton, the co-founder, sold £71 million worth of stock in the company. Mr Dunkerton did not give a reason for the share disposal, and has agreed not to sell any more shares in the next 90 days. Since leaving the company in March, Mr Dunkerton has focused on his hotel chain and charity work. The announcement of the disposal prompted stockbroking firm, Liberum, to downgrade the company from buy to hold.

EUR/USD is in the red this morning, and the single currency enjoyed a short-lived boost on the back of an impressive German manufacturing update. The report showed a reading of 57.3 in July, up from 55.9 in June, and the consensus estimate was 55.5. It is concerning that the single currency gave back its gains so quickly.

Alphabet shares will be in focus today after the company reported better-than-expected second-quarter figures last night. Earnings per share were $11.75, while analysts were expecting $9.59. Revenue was $32.7 billion, which also topped forecasts.   

We are expecting the Dow Jones to open up 74 points at 25,118 and we are calling the S&P 500 up 8 points at 2,815. 

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