FTSE marches higher as Chinese demand story fuels appetite for miners
01:00, 10 April 2013
· By CMC Markets
Significantly higher than expected Chinese import numbers lifted European equities at the open as traders priced in strong demand for raw materials, as the world’s second largest economy looks set to continue with its aggressive expansion.
Once again cyclical names have been the main beneficiaries with miners on the move higher. Vedanta are the top performer in the sector early on after announcing improved output across their major markets, sending their stock over 3% higher.
Airlines are also on the rise after IAG saw their latest bid for Spanish carrier Vueling recommended by the board. The proposed acquisition has had a positive effect on the sector, with EasyJet also markedly higher after an upgrade from analysts at Citigroup, who cited the potential for significant cash returns to shareholders going forwards, coupled with 20% upside in the share price on bullish forecasts for earnings growth.
With financials trading up over 1% in London, the market is giving a clear indication of its views on the unraveling situation in Slovenia. Investors are taking the view that if equity markets can shake off the Cypriot bailout there’s no reason to assume a different approach to Slovenia, with the apparent Eur7bn hole in bank balance sheets a drop in the ocean in real terms.
Minutes from the latest Fed meeting will provide the focus of afternoon trade, and numbers from Bed Bath & Beyond, Family Dollar Stores and others will keep equity-focussed clients on their toes as earnings seasons gets going in earnest.
CMC Markets clients are evenly split as to whether this week’s bounce represents the resumption of the bull run, or a short term bounce in a deeper correction still to come. Clients looking to aggressively short indices are focusing their attentions on the US benchmarks given their continued outperformance in spite of last week’s shaky employment data.