• Europe rallies on China stability, German trade • FTSE above 6100 as financials, utilities rally • Amlin bought by Japanese insurer Mitsui Sumitomo • US stocks bounce back after holiday UK and European shares rallied on the open for the second day this week. A late ramp on the Shanghai composite despite disappointing trade data helped ease concerns of an immediate return to plunging stock markets on China’s return from its national holiday. There’s some relief that yesterday there were some more sensible investor-friendly regulations tabled by Chinese authorities; namely the removal of tax on dividends and introduction of a circuit breaker for the Shanghai Composite stock exchange. German exports and imports improved in August. It’s comforting to see the devaluation of emerging market currencies; particularly the Chinese yuan is not yet having a material effect on demand for European goods. Eurozone GDP growth for the second quarter was revised higher to 0.4% from 0.3%. The FTSE 100 held up above the September lows on Monday, setting the groundwork for another push through 6,100 on Tuesday. Financials and utilities were the best performing sectors in early Tuesday trading. A 6% leap in the shares of Germany’s Commerzbank after a broker upgrade boosted banking shares across Europe. A broker upgrade to United Utilities saw shares trade higher with the likes of Centrica and Severn Trent moving up in kind. UK Insurer Amlin was bought by Japanese rival Mitsui Sumitomo sending shares higher by over 30%. The deal was for £3.47bn, a hefty 36% premium over Amlin’s share price on September 7. The size of the premium possibly reflects a sum needed to overturn the Amlin management’s previously stated disinterest in a deal. With the Nikkei at multi-year highs, Japanese companies have been on the lookout for opportunities to use inflated market caps to fund expansion away from the sluggish domestic economy. USA pre-opening levels S&P 500: 34 points higher at 1,955 Dow Jones: 275 points higher at 16,377 Nasdaq 100: 82 points higher at 4,266 CMC Markets is an execution only provider. The material (whether or not it states any opinions) is for general information purposes only, and does not take into account your personal circumstances or objectives. Nothing in this material is (or should be considered to be) financial, investment or other advice on which reliance should be placed. No opinion given in the material constitutes a recommendation by CMC Markets or the author that any particular investment, security, transaction or investment strategy is suitable for any specific person.
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