Europe midday: Stocks shrug-off uncertainty around trade and EM
European stocks are making solid gains as investors brush aside concerns about trade tensions between the US and China, emerging markets and despite a mixed close on Wall Street overnight.
Investors were also shrugging-off the recent back-up in US Treasury yields, helped by perhaps by more dovish than expected guidance from the Norwegian central bank on interest rates.
Norges Bank hiked its main policy rate by 25 basis points to 0.75%, as expected, but according to analysts at TD Securities sounded a somewhat dovish note.
At 1222 BST, the benchmark Stoxx Europe 600 index was up 0.51% or 1.91 points at 381.89, while Germany's DAX was adding 0.53% or 64.60 points to 12,283.78 and France's CAC 40 was 0.75 or 40.46 points higher to 5,435.21.
Hussein Sayed, chief market strategist at FXTM, said equity markets don't seem to be concerned over the latest phase of the US-China trade war.
"The 10% tariffs imposed by the US on $200bn-worth of Chinese goods seemed to be a relief rather than a catastrophe given that markets were bracing for a 25% figure. Similarly, the Chinese response was a softer hit than anticipated after announcing that the nation won't engage in currency devaluation," Sayed said.
Traders were also brushing-off a gloomy prognosis from the Organisation for Economic Co-operation and Development on the back of lowered forecasts for the likes of Turkey, Argentina, South Africa and Brazil.
According to the Paris-based OECD, the outlook for the world economy is surrounded by "high uncertainty" due to the worsening outlook for EM markets and as trade tensions build-up.
Auto stocks racked up healthy gains, with the Stoxx 600 sub-index for autos and parts up 1.45% to 557.17 after Kepler upgraded the sector to 'neutral' from 'underweight', saying that valuations have reached historically low levels, pricing in a lot of bad news already.
Basic Resources were also on the up, with the corresponding Stoxx 600 gauge up by 1.0% to 449.51.
Kepler said its analysts envisage a series of late-year bounces within Europe’s depressed value universe in segments that have been largely abandoned by investors. "September and October demand data should be key tests for such a potential bounce," it said.
Belgian telecoms group Proximus was on the front foot after an upgrade to 'buy' from Citi, while Rio Tinto was higher after the miner outlined plans to return around $3.2bn to shareholders through a share buyback programme following the disposal of its coal assets.
Drinks giant Diageo gained after saying that its financial year has "started well", though it has been buffeted in recent weeks by increased emerging market foreign exchange volatility.