14th Jul 2014 09:49
LONDON (Alliance News) - Stock markets are trading higher across the UK and Europe Monday, rebounding from the heavy sell-off suffered last week, although the rally has stalled after eurozone industrial production data confirmed a slowdown in May.
"After a couple of days off, the worries and fears of the previous week appear to have been consigned to history," said IG market analyst Alastair McCaig.
Fears of another eurozone banking crisis were sparked last week after the owners of Portugal's largest listed bank had problems with a bond payment, but with the problem contained, the equity sell-off that followed appears to have been overdone.
"It's hardly surprising that, just five years on from the worst global banking crisis in recent memory, the market has the scope to overreact to banking contagion fears," said Spreadex trader David White.
By mid-morning Monday the FTSE 100 is up 0.6% at 6,730.95, the FTSE 250 is up 0.6% at 15,539.35, and the AIM All-Share is up 0.5% at 774.41.
Stock in Europe are enjoying a similar rebound. In France, which is celebrating Bastille Day, the CAC 40 is up 0.5%, while in Germany, which is celebrating winning the World Cup, the DAX 30 is up 0.7%.
Although holding onto most of the gains, indices across Europe are slightly off their morning highs, having softened a little after Eurozone data confirmed that industrial production shrank by 1.1% month-on-month in May, reversing the 0.7% gain recorded in April, while on an annual basis production grew at 0.5%, having slowed from 1.4% in April.
While a poor number had been expected given the disappointing production data from across the eurozone as well as the UK last week, the 1.1% fall is the largest drop since September 2012 and far from positive in the climate of concern over the weak eurozone economic recovery.
Sports Direct International leads the FTSE 100 gainers, up 4.4% following the announcement of a partnership that will give it access to 12 million new potential customers in Australia and New Zealand. Sports Direct will form an online partnership with ozsale.com.au, part of the Mysale Group, the newly AIM-listed retailer in which Sports Direct bought a 4.8% stake last month.
Shire shares reached another new all-time high in early trade. Shire shares peaked at 5,050 pence in early trade and continues 2.6% higher following the announcement that its management is now "willing to recommend" the the latest offer from US rival AbbVie to shareholders. AbbVie's most recent proposal, the fifth one since the first approach back in May, is a combined cash and share offer equates to GBP53.20 per share. Shire's shares now trade about 45% higher than when the initial approach was made.
Rolls-Royce shares are up 1.4% following the announcement that it has won the contract to supply aircraft maker Airbus with its new Trent 7000 engines for Airbus's new A330neo aircraft.
With little else left in the economic calendar Monday, other than an appearance by European Central Bank President Mario Draghi in front of the European Parliament after the UK market close, investor attention is likely to switch to US corporate earnings as the session goes on. Citigroup is the first of the major US banks to release its numbers Monday.
Futures trading currently indicates that stocks on Wall Street will follow those in the UK and Europe by opening higher, with the DJIA and the S&P 500 both currently pointing up about 0.4%.
By Jon Darby; [email protected]; @jondarby100
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