By Peter Nurse
Investing.com - European stock markets traded marginally higher Monday, helped by China’s central bank injecting liquidity into its financial system but weighed on by fresh coronavirus outbreaks and weak growth data from Japan.
At 4 AM ET (0800 GMT), the DAX in Germany traded 0.2% higher, the CAC 40 in France rose 0.3% and the U.K.'s FTSE index was up 0.4%.
Earlier Monday, China’s central bank added 700 billion yuan ($101 billion) of one-year funding into its financial system via the medium-term lending facility. This was a sign the country’s central bank wants to keep monetary policy very loose to help the economy recover from the coronavirus pandemic.
China’s economy, the second largest in the world, had been the first of the world's big economies to recover from the shock of pandemic-driven lockdowns, but the recovery has shown signs of flattening out of late, with industrial production falling short of expectations and retail sales still below year-earlier levels in July.
This news contrasts with data showing Japan was hit by its biggest economic contraction on record in the second quarter, as the world's third-largest economy shrank an annualised 27.8% in April-June. Here, as with the U.S. data, the practice of annualization wildly distorts the likely outcome for the year as a whole.
In Europe, fresh outbreaks of the Covid-19 virus caused concern. Over the weekend, Germany's foreign ministry issued a warning about travel to Spain, while France posted its highest daily number of new cases in three months and Italy ordered nightclubs around the country to close again. Late last week the U.K.added France and the Netherlands to its quarantine list.
In corporate news, French healthcare company Sanofi (PA:SASY) (NASDAQ:SNY) agreed to buy U.S. company Principia Biopharma (NASDAQ:PRNB) for around $3.7 billion, strengthening Sanofi's presence in research and development areas. Sanofi stock rose 0.1%.
Elsewhere, the mining sector benefited from China’s move, as the Asian giant consumes a lot of the raw materials these companies produce. Anglo American (LON:AAL) rose 2.3%, BHP Group (NYSE:BHP) climbed 1.6% and Rio Tinto (NYSE:RIO) 1.4%.
Oil prices advanced Monday, following recent signals that supply and demand are returning closer to balance after the coronavirus outbreak and a spat between Saudi Arabia and Russia caused a dramatic oversupply earlier this year.
The U.S. and China postponed talks planned for the weekend aimed at reviewing progress at the six-month mark of their phase-one trade agreement. But China is already expected to import a record 32 million barrels of U.S. oil in August, according to Refinitiv Eikon data, easing concerns that it won’t meet its purchase commitments.
The OPEC+ producer bloc, which also includes Russia, will meet this week in the form of its Joint Ministerial Monitoring Committee to discuss production levels.
U.S. crude futures traded 0.5% higher at $42.23 a barrel, while the international benchmark Brent contract rose 0.4% to $44.99.
Elsewhere, gold futures rose 0.8% to $1,965/oz, continuing to trade in an elevated range just below the $2,000 level. EUR/USD traded 0.1% higher at 1.1850.