Strong Asian session lifts Europe at the open as cyclicals march higher
A positive performance from equities overnight in Asia has seen European indices start on the front foot this morning as Chinese inflationary concerns eased. Optimism over the Bank of Japan’s asset purchase programme also fuelled markets as the rebound from last week’s sell-off continued.
This renewed optimism over the Asian growth story sees miners occupying the top 9 positions in the FTSE gainers chart early on, as speculation over improved demand for raw materials gives the index a lift. ENRC lead the way, up over 5% at 261 – 30% higher than the lows of last week.
Financials are also higher as the cyclical trade comes bank into fashion, with the high street banks leading the way higher. Barclays were particularly strong as JP Morgan reiterated its advice to clients to get long of the stock ahead of their earnings, with shares in the bank looking ‘attractively valued’.
Industrial Production numbers from the UK at 09:30 alongside Trade Balance figures will make for press talking points, with the death of former Prime Minister Baroness Thatcher having reignited debate in the British press over the state of the UK manufacturing industry. Her ability to divide opinion so strongly even in death is perhaps the greatest testament to the woman known as the Iron Lady.
An empty afternoon macro calendar will likely see attention switch back to Cyprus with the formal memorandum of understanding due to provide details of the bailout package, though it seems equity markets have largely made peace with the deal.
Bulls will be hopeful that last night’s Alcoa beat has set the tone for this quarter’s earnings season, as the aluminium giant topped estimates to trade higher after hours. We will have to wait until later in the week to see if others follow suit, with no major earnings on today’s card.
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