European Shares Higher; LSE Bid Scrapped; IFS On UK Debt; German Industrial Orders

European Shares Higher; LSE Bid Scrapped; IFS On UK Debt; German Industrial Orders

London Capital Group  | Oct 08, 2019 09:25

European shares gained ground on Tuesday morning. A rare positive economic surprise from Germany is setting a happier tone. A warning that global growth may come in lower than the World Bank’s previous estimates according to its President has not come as a huge surprise.

The FTSE 100 is putting more distance above the key 7,000 level with a 4-day high on Tuesday. The gains in UK markets are in keeping with a pickup in optimism by stock investors since last week’s hefty sell-off. The UK index has been supported by losses in the British pound following a warning from the Institute for Fiscal Studies (IFS) that a No-Deal Brexit would push UK debt to its highest level since the 1960s. The warning serves as a reminder to the potential costs of a no-deal exit at a time when traders were starting to price out the possibility it could happen.

London Stock Exchange Group (LON:LSE) shares dropped 6% at the open after rival Hong Kong Exchange and Clearing Ltd (HK:0388) scrapped its takeover bid. Another year another failed bid for the LSE. Still, we look forward to next year’s attempt. Of course there is always the issue of valuation, but we think the HK bid failed for much the same reason the previous effort from Deutsche Borse did. A clear unwillingness to sell from LSE management and most shareholders. There is a well known sideline issue that may be contributing to this anti-sale attitude. At a time of financial uncertainty before the UK leaves the EU, few British shareholders want to see the nation's stock exchange in foreign hands.

Germany’s DAX is aiming for a 4th consecutive daily gain. While factory orders stirred talks of a German recession yesterday, today industrial orders have raised the possibility recession could be avoided. Industrial orders rose by 0.3% m/m vs expectations of a -0.1% fall. Whether Germany’s economy is ends up with +0.1% or -0.1% growth in the third quarter is really neither here nor there. It’s still a difficult economy by modern German standards. The avoidance of recession is purely a psychological benefit that could lift animal spirits for the coming quarters.

Dow and S&P 500 futures suggest a flat to lower open on Tuesday. Traders are taking a cautiously optimistic approach to trade talks later this week. The prelude to the talks has not been without difficulty. Overnight the US widened its list of blacklisted Chinese companies to include top surveillance and artificial intelligence start-ups. The move from the US is symbolic in two ways. 1. A response to China reportedly trying to shrink the areas covered by a trade deal 2. A reminder that technological security and intellectual property are top of the US agenda. At this stage, it feels like we are just taking solace in the talks even taking place despite the clear differences on the two sides.

US opening calls

Dow Jones to open -10 points lower at 26,468

S&P 500 to open -1 point lower at 2,937

Original Post

London Capital Group

Related Articles

Latest comments

Add a Comment
Please wait a minute before you try to comment again.
Write a reply...
Please wait a minute before you try to comment again.

Trading in financial instruments and/or cryptocurrencies involves high risks including the risk of losing some, or all, of your investment amount, and may not be suitable for all investors. Prices of cryptocurrencies are extremely volatile and may be affected by external factors such as financial, regulatory or political events. Trading on margin increases the financial risks.
Before deciding to trade in financial instrument or cryptocurrencies you should be fully informed of the risks and costs associated with trading the financial markets, carefully consider your investment objectives, level of experience, and risk appetite, and seek professional advice where needed.
Fusion Media would like to remind you that the data contained in this website is not necessarily real-time nor accurate. The data and prices on the website are not necessarily provided by any market or exchange, but may be provided by market makers, and so prices may not be accurate and may differ from the actual price at any given market, meaning prices are indicative and not appropriate for trading purposes. Fusion Media and any provider of the data contained in this website will not accept liability for any loss or damage as a result of your trading, or your reliance on the information contained within this website.
It is prohibited to use, store, reproduce, display, modify, transmit or distribute the data contained in this website without the explicit prior written permission of Fusion Media and/or the data provider. All intellectual property rights are reserved by the providers and/or the exchange providing the data contained in this website.
Fusion Media may be compensated by the advertisers that appear on the website, based on your interaction with the advertisements or advertisers.

English (USA) English (India) English (Canada) English (Australia) English (South Africa) English (Philippines) English (Nigeria) Deutsch Español (España) Español (México) Français Italiano Nederlands Português (Portugal) Polski Português (Brasil) Русский Türkçe ‏العربية‏ Ελληνικά Svenska Suomi עברית 日本語 한국어 简体中文 繁體中文 Bahasa Indonesia Bahasa Melayu ไทย Tiếng Việt हिंदी
Sign out
Are you sure you want to sign out?
Saving Changes


Download the App

Get free real time quotes, charts and alerts on stocks, indices, currencies, commodities and bonds. Get free top of the line technical analysis/predictors. is better on the App!

More content, faster quotes and charts, and a smoother experience is available only on the App.